Question

In: Economics

Comment on the role of buyers and sellers in the context of Industry Rivalry.

Comment on the role of buyers and sellers in the context of Industry Rivalry.

Solutions

Expert Solution

Industrial Rivalry refers to the intensity with which firms within an industry exert pressure on each other to reduce the potential profits or gains made by others . It measures the competitiveness within an industry . As the number of firms increases , the rivalry to get more and more market share also rises between them . Industrial rivalry usually leads firms to produce best quality products at the cheapest since that is the most appealing way to capture the market .

Buyers can pressurize firms by switching over to substitute goods , so that firms are forced to provide good quality products in order to maintain the rivalry . Sellers can also sell goods of that firm only that offers the best price . Thus buyers and seller's attitude towards demand of goods can accentuate the rivalry between firms . In order to satisfy consumer needs and gain a large chunk of market share the firms fight constantly to produce best product at lowest price .


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