First-mover disadvantages can include which of the following?

• A. Guaranteed long-term market dominance
• B. Lower risk of failure compared to later entrants
• C. High research and development costs
• D. Immediate access to established customer loyalty

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of 'first-mover disadvantage' in microeconomics. It refers to the potential negative outcomes a company might face by being the first to enter a new market or develop a new product.
2. Step 2: Identify typical disadvantages associated with being a first mover. These often include high costs related to research and development (R&D), uncertainty about market acceptance, and the risk of making costly mistakes without prior market information.
3. Step 3: Analyze each option given in the problem: 'Guaranteed long-term market dominance' and 'Immediate access to established customer loyalty' are usually advantages, not disadvantages, of being a first mover.
4. Step 4: Recognize that 'Lower risk of failure compared to later entrants' is generally incorrect because first movers often face higher risks due to untested markets and technologies.
5. Step 5: Conclude that 'High research and development costs' is a valid first-mover disadvantage because pioneering firms must invest heavily in innovation without guaranteed success.