<P> The first of the three is technological leadership . A firm can gain FMA when it has had a unique breakthrough in its research and development (R&D). A new, innovative technology can provide sustainable cost advantage for the early entrant; if the technology, and the learning curve to acquire it, can be kept proprietary, and the firm can maintain leadership in market share . The diffusion of innovation can diminish the first - mover advantages over time, through workforce mobility, publication of research, informal technical communication, reverse engineering, and plant tours . Technological pioneers can protect their R&D through patents . However, in most industries, patents confer only weak protection, are easy to invent around, or have transitory value given the pace of technological change . With their short life - cycles, patent - races can actually prove to be the downfall of a slower moving first - mover firm . </P> <Ol> <Li> In a 1981 paper Michael Spence discusses how the technological learning curve can be kept proprietary, making for a huge barrier to entry on the part of others . Although the starters in a FMA market have complete control for a period of time, the competition still remains, trying to chase the originators . Spence states that firms trying to emerge as first - movers will usually sell their products below cost in an effort to understand the market better (i.e. gain intelligence); and then, once established, turn the market around and control the market's cost . Though Spence states that this sort of competition reduces profitability, most of the time it is needed to break into the new markets . </Li> <Li> Papers by Gilbert and Newbery (1982) and Reinganum (1983) illustrate what happens if a first - mover firm, or close followers, were to assume what each other's R&D departments are doing . This can result in the second - or third - movers surpassing the leaders because they are out - thinking their competition . </Li> <Li> Procter & Gamble is an example where a company's technology leadership helped propel their product (disposable diapers) into the US market . They used a learning - based preemption to help invest in low - priced European synthetic fiber, which helped keep costs down, and allowed for selling the diapers profitably at a cheaper price . </Li> <Li> Physical aspects of FMA are not the only way certain firms acquire this advantage . Managerial systems that help the organizational and behavior aspects of the company may prove to be highly beneficial to emerging companies . When a firm's management style is unlike any other, and grasps certain concepts of management and the economy that other firms do not, then they will benefit (e.g. American Tobacco, Campbell Soup, Quaker Oats, Procter & Gamble). </Li> </Ol> <Li> In a 1981 paper Michael Spence discusses how the technological learning curve can be kept proprietary, making for a huge barrier to entry on the part of others . Although the starters in a FMA market have complete control for a period of time, the competition still remains, trying to chase the originators . Spence states that firms trying to emerge as first - movers will usually sell their products below cost in an effort to understand the market better (i.e. gain intelligence); and then, once established, turn the market around and control the market's cost . Though Spence states that this sort of competition reduces profitability, most of the time it is needed to break into the new markets . </Li> <Li> Papers by Gilbert and Newbery (1982) and Reinganum (1983) illustrate what happens if a first - mover firm, or close followers, were to assume what each other's R&D departments are doing . This can result in the second - or third - movers surpassing the leaders because they are out - thinking their competition . </Li>

All of the following are examples of pioneering costs except the costs of