As the prices of computers fell, what happened to their quality? How is this possible? How...

As the prices of computers fell, what happened to their quality? How is this possible? How did the computer industry end up being dominated by only a few firms?

Expert Solution

It shall be noted that quality of the computers actually improved as the price fell.

The competitive process allows entry to occur in profitable industries. As profits are "squeezed" out, firms improve their product and technology, resulting in improved quality.

The computer industry ended up being dominated by only a few firms because with this technological revolution, the firms earned a higher and higher profit every year. The world went crazy about digitization. Also, it is not only the product but different technological never-seen-before features that these companies introduced in computers from time to time, that helped the potential buyers to witness the power & potential they could realize with the increased usage of computers. This provided the companies with the scope for making huge investments and brand-building, that exponentially raised their scale of production and helped them become further rich, global and so powerful, and entrenched that dislodging them became unthinkable.

Rahul Sunny answered 1 year ago

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