14 Some firms and their products face intensively competitiv

1.4 Some firms and their products face intensively competitive markets while other firms and their products have little to no effective competition. Explain why this condition may exist, which economic models describe both situations, and give examples to support your answer.

Solution

This condition ismajory exosting because of difference in ecomocial situation from the market point of view. In pure competition market the payers tend to do price war as the competition is very high. Price sensitive product segment such as consumer goods companies need to apply strategies to chose their pricing based on the competition and from customer value proposition. In monopoly market pricing power lies within the limited players. This helps to reduce the bragainin power of buyers and pricing will be out of control or having limited control from the competition point of view. One of the best example is operating system product of Windows. Most of the market is effectiveley locked in with the compatibility platform of majortity of the software with the Windows. In oligopoly market entrybarrier for companies to market is very high so that pricing is purely based on the mutual decision between the limited players.eg: Oil manufactruing. Thus based on the market situation pricing of the product and the strategies will change.