In addition to legal protection,
we can think about things like first-mover advantages.
So if there are substantial first mover advantages,
you can protect that intellectual property.
One example would be learning curves, which we've discussed before.
This is the idea that over time as you produce a product,
you go down a learning curve, perhaps lowering your cost or
improving the quality from this, that experience of producing that product.
Intel, in the microprocessor industry, is a company who's
been continually moving down the learning curve on microprocessors, and
as a result, has been able to protect their intellectual property and
their position through that process.
When you have a product or a service that maybe gets branded and
creates customer loyalty, that might be sufficient to keep competitors at bay.
You think about these products that end up taking on the name of the attribute
they have themselves, like a Kleenex in the tissue industry,
or a Xerox for the photographic copying machines.
All of these are examples of companies who were able to move in early and
that early movement gave them an advantage, would helped,
at least for some time, keep competitors at bay.
The last thing to think about with first-mover advantages are network
externalities.
We've talked about these before.
This is the idea that the value of a greater service increases as others
consume it.
So a classic example, again, would be something like the telephone.
To be the first owner of a telephone is quite not valuable to you.
It's only when others get telephones that it then has value,
because now you have people to call.
You see this a lot in various text sectors,
social media companies, and the like.
The more people use a social media platform, the more valuable it becomes.
Well, if you're able to lock in a user base early on,
if there's a substantial first-mover advantage, that can then strongly protect
your IP, even if others try to copy exactly what you do.