Question

Give an example of a monopolistically competitive market that could become a monopolistic or dominant firm market under certain possible circumstances. What are those circumstances and how will they make this market less competitive?

Answer 1

The market for smartphones are monopolistically competitive market, that could become a monopolist market, if one firm such as Apple come up with the disruptive technologies and become much ahead of the competition. Then, it will create dominant firm market or monopolist market.

It will happen in following circumstances:

1. Apple has all the technologies and rights of patent of design, OS and other important applications.

2. Apple starts producing with economy of scale, driving others to be out of the market

3. Apple has presence in all the markets and it has the products that is liked by everyone