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It is a high possibility that the government's price will never be an equilibrium price. If...

It is a high possibility that the government's price will never be an equilibrium price. If the government prevents firms from competing over price, firms will compete on whatever dimensions are open. What can those dimensions be?

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Answer #1

Dimensions for firms to compete other than price are

  • Quality of product
  • Advertising
  • Customer services
  • Market or consumer location.

There are many more other than above.

By improving the quality of product at the given price, firms can attract many new consumers to it.

Advertising have great psychological effects on consumers and firm can compete will to acquire as much market share as possible.

Great customer service leads to happy consumers and it can benefit firms in gaining market share.

Location of market is very important it helps to firms to focus in particular region from where they can genarate good revenue without wasting resources.

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