Question

Choose a good or service that is supplied by a small number of firms (e.g., automobiles). What are the most important dimensions (price, technology, advertising, etc.) on which these firms compete. Provide an example of recent mutual interdependence (provide a link to your references).

Answer 1

'Good or service that is supplied by small number of firms ' :

It is also known as oligopoly.

OLIGOPOLY: It can be defined as a competition among few people. The firms sell homogeneous as well as heterogeneous products. Oligopoly generally exists when there are only 5 to 10 sellers.

There are number of goods and services that are supplied by small number of firms , one of them is

TELECOMMUNICATIONS:The services offered by the companies of telecom are voice, data, video etc. Today each and every person makes use of this service be it a rich or poor .Some use it for calling ie audio voice purposes and some use for the data ie internet purposes as today internet has become one of the most important things, so everyone has access to internet for sure.

It is a service offered by very few sellers which make it highly competitive.

Presently the companies offering the service of telecommunication are airtel, idea, reliance and few more.So we can say that ther are very few seller of the telecom service.

Dimension on which these companies compete:

1. Network Connection: It is one of the main factor responsible behind the competition of these companies. If a company is offering the service but the network is too bad that even a call cannot be done then what is the use of using that partiular network. So people may discontinue that particular network and might switch to some other.

2. Data speed: Again speed is one of the very important factors as internet is used by everyone and each and every work requires internet today.But if the speed if too slow to open a website , it becomes difficult to continue the network as the customers are paying for it an getting this type of speed.

3. Price: It is ofcourse an essential factor as it matters alot that which network company is offering which plans, mostly every company offer the same rate to avoid the competition on the basis of price.

MUTUAL INTERDEPENDENCE: Market is said to be mutually interdependent when two or more entities or companies depend on each other.

Eg: Jio, a telecom company has started offering free sims with unlimited data and calling due to which the other companies like airtel and vodafone were in thought of what should they do in order to retain the customers and make the new customers as well, s they also went down and lowered the prices just like jio to be competitive in the market.