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In a market where competitive pressures do not allow one firm to charge higher prices than...

In a market where competitive pressures do not allow one firm to charge higher prices than other firms, the firm with a cost advantage will be able to generate more value than competitors - Discuss

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Yes it is true. The firm having better resources or techniques will earn more profits not only in the short run but in the long run also. Quite often the profit is due better entrepreneurs. As shown in fig 1 AC is less than price and thus firm earns economic profit not only in short run but in longrun also. As shown in fig 2 other firm will be just making accounting profits or its cost=price. This firm is called marginal firm. Question may arise will not other firms enter into market motivated by lower profits. The answer is they will have already made entry and marginal firm will be just breaking even

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