Production Cost Advantage

Production Cost Advantage

A source of competitive advantage that depends on producing some product or service at the lowest cost.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Production Cost Advantage

The ability for an economic actor to produce a good or service at a lower cost. For example, if a company produces 100 widgets for $50 and a second company produces 100 widgets for $25, the second company has a production cost advantage in the production of widgets. See also: comparative advantage, absolute advantage.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
In addition, it is demonstrably cheaper for China's factories to churn out weapons systems-and it is not just cheap labor driving this production cost advantage.
The year ahead is looking good for the petrochemical sector in the region, given the regions lower production cost advantage. With three new projects having commenced production in 2009, QPIC is well on its way to meeting its strategic objectives of sustained growth and returns to its shareholders.
Though Egypt never officially banned the import of steel, for years it importation was infeasible as a result of high freight costs and a production cost advantage enjoyed by local producers.
Had auto companies broadened their earnings from overseas sources and domestic cars, or demonstrated sustainable market share or significant production cost advantage, investors, like you and me, as well as portfolio managers investing your 401K funds, would be buying up these shares.
Engine choice varies and Renault is driving home its exchange rate and production cost advantage by raising equipment levels.
Supply chain innovations contribute significantly to the unit production cost advantage Nissan enjoys over its European competitors.
Inequalities (19) states that the foreign firm will prefer to price aggressively when it is Given that the foreign firm can capture all of the low cost consumers because of its production cost advantage, ex post price flexibility, and response to a disequilibrium price, the home firm knows that it can expect to sell to only [n.sup.h]/2 consumers.
Figure Ia shows the situation where transportation costs are nonlinear but identical for all producers, and producers at A enjoy a production cost advantage over producers at C, who in turn have a production cost advantage over producers at B.
I expect that we will see a continuation of this trend, as more foreign investors find that the production cost advantages they enjoy in their homelands is less valuable than being directly attached to the world's greatest consumer market.
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