Biology Forums - Study Force

In discussions of barriers to entry, what is meant by the term "virtuous cycle"?

• A virtuous cycle refers to successful research and development that leads to information that is used to develop other new products.

• A virtuous cycle refers to a firm using the profits from a monopoly in one market to establish a monopoly in another market.

• A virtuous cycle refers to the situation where the pursuit of self-interest in establishing an entry barrier leads to an increase in social welfare (the "invisible hand").

• A virtuous cycle refers to a situation where if a firm can attract enough customers initially, it can attract additional customers because its product's value has been increased by other customers using it, which attracts even more customers.

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