Question

Explain and justify your responses: If a car is a car, so how do car companies compete effectively with each other?

Answer 1

Since the car market is an oligopolistic market and in an oligopolistic market-

• Few sellers large buyers
• Barriers to entry and exit
• Product differentiation.
• Promotion, branding are strategies

So instead of a car is a car as we called but then two cars are not the same because the market is oligopolistic and the competitors compete on the basis of their product, quality, standards etc.

For example, two car companies say Honda and Volkswagon, both produce cars but they have much differentiation in their quality, product, and services so we cannot say that both have the same cars