UK0,M<$b@mevgɦmJ8s =-bU#b5')byiDz)%2.&_NKpGtJ|QGdr:>Fj0rA ؞F&!| 4`,mz3[
Student videos

Incumbent firms

  • Levels: AS, A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

The advantages of firms being already established in an industry are examined in this short topic video.

Incumbent firms

Examine the advantages from being established in a market / industry

Incumbent firms are businesses already established in each market or industry.


  1. Established firms can achieve internal economies of scale which lower long run average cost and make them more competitive in price terms against potential rivals
  2. Market intelligence and learning from being in the market allows them to move down their experience curve
  3. Incumbent firms can build customer loyalty and brand recognition. This lowers the marketing costs of selling to existing consumers
  4. Existing firms might have used a process of vertical integration to give them greater control of the supply chain in their industry

Moving down the experience curve -

The concept behind the Experience Curve is that the more experience a business has in producing a product, the lower its costs.

Evaluation points:

  1. Later entrants into a market can avoid some of the mistakes made by the first mover
  2. Many new rivals achieve scale and brand recognition in other industries which makes market entry easier
  3. Existing firms may suffer a brain drain effect (losing skilled workers) or may start to suffer from diseconomies of scale.
  4. Patent protection does not last forever – once a patent becomes generic, often lots of similar products enter an industry

Subscribe to email updates from tutor2u Economics

Join 1000s of fellow Economics teachers and students all getting the tutor2u Economics team's latest resources and support delivered fresh in their inbox every morning.

You can also follow @tutor2uEconomics on Twitter, subscribe to our YouTube channel, or join our popular Facebook Groups.

Job board

EPQ Mentor



Teaching Vacancies


Advertise your vacancies with tutor2u

Much cheaper & more effective than TES or the Guardian. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences.

Find our more ›

Advertise your teaching jobs with tutor2u