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Cost structure and its effects on large and small firms and negative externalities on software companies by CPA Guru

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Cost structure and its effects on large and small firms and negative externalities on software companies

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Explain why the cost structure associated with many kinds of information goods and services might imply a market supplied by a small number of large firms. (At the same time, one internet business such as grocery home deliveries have continually suffered steep losses regardless of scale. Explain why.) Could lower transaction costs in e-commerce ever make it easier for small suppliers to compete? As noted in Chapter 3, network externalities are often an important aspect of demand for information goods and services. (The benefits to customers of using the software, participating in electronic markets, or using instant messaging increase with the number of other users.) How might network externalities affect firm operating strategies (pricing, output, and advertising) and firm size? Complete this essay in a Microsoft Word document, with a minimum of 300 words, APA formatted, with title page and 2 reputable references.  Here is part of the essayCost structure refers to those expenses incurred by a company in the whole production process until a finished product is obtained from raw materials. In every stage of production, a company has to reduce costs so as to get more revenue. Cost structures can be divided into two categories that are value-driven and cost-driven structures. A value-driven structure puts more emphasis on the value creation process. This cost goes to production aspects such as branding while cost-driven structures concentrate more on spending less money on the production and distribution process (smith, 2012). Therefore, large firms with more recourse base enjoy economies of scale in their production process. For example, they.......

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