The likelihood of new entrants joining an industry is low if switching costs are high because:
A) new entrants struggle to match incumbents' prices.
B) this discourages customers from buying a new entrant's offerings.
C) new entrants struggle to gather enough cash to get started.
D) each incumbent has a group of loyal customers that enjoy its unique features.
E) new entrants struggle to get their offerings to customers.

Question

Quizplus · Accepted Answer

High switching costs discourage customers from changing from an incumbent's product to a new entrant's product, making it difficult for new entrants to attract customers.

The Likelihood of New Entrants Joining an Industry Is Low