Final answer:
In a slow-cycle market, firms are shielded from imitators for long periods of time due to factors such as reputation, brand name, and size of demand compared to economies of scale.
Step-by-step explanation:
In a slow-cycle market, firms are shielded from imitators for long periods of time. This is because there are certain characteristics that provide competitive advantages and make it difficult for competitors to replicate the firm's success. These characteristics can include:
- A well-established reputation for slashing prices in response to new entry: If a firm has a reputation for quickly responding to new entrants by lowering prices, it can deter potential competitors who may be discouraged by the firm's aggressive pricing strategies.
- A well-respected brand name that has been carefully built up over many years: A firm with a strong brand name has built trust and loyalty among customers, making it more difficult for new entrants to attract customers away from the established brand.
- An industry where economies of scale are very small compared to the size of demand in the market: A slow-cycle market is one where the economies of scale are not significant, meaning that small firms can effectively compete with larger ones. This makes it difficult for potential imitators to gain a competitive advantage based on scale.