> There is also the problem that if the incumbents move to undercut, then any onlooker would assume that even if they bought the infrastructure they would also face the same undercutting; and would therefore have to remain solvent longer than an incumbant to make a return
But the incumbent has the same problem. If the unit cost is $1 and they're selling for $0.90 to undercut you, they're losing money too. Anybody can see that they won't be able to keep that up forever, and as soon as they stop, whoever invested in the competition is making money.
> I think this is why there is so much focus on tech or disruption; you need some way to compete against the scale efficiency of the incumbant.
Most markets have a minimum scale past which being larger provides no significant efficiency benefit and only creates diseconomies of scale from bureaucratic overhead and internal politics. This is why companies try to commit antitrust violations to keep barriers to entry high enough that others can't get a foothold. Because once they do, the incumbent has no advantage and is commonly outmaneuvered because monopolists typically become inefficient from lack of competitive pressure and existing customers tend to hate them.