Learning Curve

The fact that performing an action for the 1,000th time will cost less than doing it for the first time. In general the marginal cost of performing an action will decrease as it is done more frequently, these increases in efficiency arise from uncovering more productive approaches.

Gillette managed to exploit this fact with the production of razor-blades. By ensuring his company was the source of most of the world's supply he could achieve such high levels of efficiency that no other manufacturer could produce the same goods at the same cost.

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The following pages link to here: Marginal Cost