Monday, November 7, 2011

Dominant Firm and Competitive Firm

The Wall Street Journal has a good example of the dominant firm model that I talk about in my classes. Here Apple and Amazon are competing for customers and the competition revolves around the pricing of Lady Gaga music downloads. Specifically, Amazon is trying to get out of the price taking model that Apple has created, by trying to lure customers away with lower prices. Apple is not willing to change its pricing due to it having significant market share or it is acting like a dominant firm.

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