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Posted: October 5th, 2022
THE EFFECTS OF COMPETITION ON RESIDUAL INCOME.
13.6 THEEFFECTSOF COMPETITION ON RESIDUAL INCOME.If the firm competes in a very competitive, mature industry, what effect will competitive conditions have on residual income for the firm and others in the industry? Now suppose the firm holds a competitive advantage in an industry, but the advantage is not likely to be sustainable formore than a few years because of the potential for entry in the industry. As the firmâs competi- tive advantage diminishes, what effect will that have on that firmâs residual income?
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