notes - Economies of scale- The more you produce the lower...

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Economies of scale - The more you produce the lower average cost of production; source of positive feedback - Average cost of a product decreases the more it is produced. Network externality - 1. What is lock in? What is switching costs? Lock in - when the costs of switching from one brand of technology to another are substantial Switching costs - the costs caused when you decide to start using a new, incompatible system - Measures the extent of a customer’s lock in to a given supplier 2. How does switching costs affect competition between Microsoft word and WordPerfect? Microsoft Word provided a built in, specially designed help for Word Perfect users. 3. Give three examples of switching costs -Buying a new Mac after needing an upgrade from your older dell PC. - Upgrading from VCR to a DVD player - Switching email servers. 4. How do switching costs affect incumbents and innovators differently? Switching costs affect incumbents more because they have already established a company and
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This note was uploaded on 04/26/2009 for the course MIS 301 taught by Professor Mccleod during the Spring '08 term at University of Texas at Austin.

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notes - Economies of scale- The more you produce the lower...

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