Given the Structure of the Automobile Industry, Entering the Auto

Multiple Choice

Given the structure of the automobile industry, entering the auto manufacturing industry seemed risky. Yet Tesla Motors joined the fray. Rather than attempting to compete head-on with internal combustion engines, Tesla Motors entered the all-electric car segment, a much less crowded niche in the overall car industry. Which of the following is Tesla most hoping to benefit from in this market niche?

A) network effects
B) economies of scale
C) customer switching costs
D) capital requirements