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

If there is few number of suppliers for a good or service in the market that means it is oligopoly market.

Example of a good or service that is supplied by a small number of firms is:

1. Automobiles :

• Fiat Chrysler   automobiles
• Ford
• General Motors etc.

1. Oil and gas industry
2. Television and high speed internet industry

The most important dimensions on the basis on which these firms compete:

• Price : firms compete with other firms through prices of their products . every firm try to keep their price less than other firm to increase demand for their goods and raise their profits.
• Advertisement : firms promote or advertise their products to attract more and more consumers.
• Product differentiation : by producing slightly differentiated products from their competitors they try to increase the sale of their products.
• Loyalty programs : a strategy of firms to encourage their customers to continue to use/buy their goods or services. They give so many offers, rewards or incentives to maintain their loyal customers.

     Recent example of mutual interdependence :

• National Petrochemical & Refiners Association

* sorry can't provide outside links. it is not allowed

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