Question

Is Apple iTunes (and/or iPod) a monopoly, a monopolistic competitor, or a competitor in a competitive market?

Answer 1

The market of iPod accessories is lucrative and increasing and there no doubt it can consider itself as strong market leader with its 70% market share. However, the IPod cannot operate as a monopoly as its wants, even by starting creating low barriers to entry. To set a high price in the market, there will have to be no Mp3 substitutes, and if Apple would start doing so it will lose a high number of potential buyers. And since we cannot predict that the IPod will always be the market leader, the Mp3 player market is monopolistic competitive market.