Question

Discuss the differing ways that an established dominant firm in an industry can react to the
threat of small firms and potential entrants. In particular, consider the determinants of an
aggressive entry-limiting and/or predatory approach vs. a more accommodative strategy. From
the standpoint of society is there a preference for one or the other?

Answer 1

The well established dominant firm in an industry reacts to the possible threat from small firms and potential entrants by incorporating several marketing strategies.
The dominant firm is the one that have greater market share. They can adopt both aggressive pricing strategies and accommodative strategies. The dominant firm have lower marginal cost so that they can sell products at lower price than others.The dominant firm uses several pricing strategies. Since the firm have around 50% of market share, even accomadative pricing policies not make ant harm. Sometimes dominant firms adopted aggressive pricing strategies to control the potential new entrants by lowering price level.
As far as consumers are concerned, they can benefit from the aggressive pricing strategies of dominant firm. If dominant firms controls the new entrants by lowering price. The consumer benefited more. They can access cheap and good quality products.