Question

The U.S. market for computers is dominated by domestic firms such as Dell, Hewlett-Packard, and Apple. The U.S. market for consumer electronics is dominated by Japanese firms and brands such as Sony, JVC, Panasonic, Mitsubishi, and Toshiba. However, the U.S. automobile market includes both domestic firms like Ford and General Motors and formidable Japanese competitors like Toyota and Honda. Please discuss the following two questions:

1. Do some theories work better than others for different industries? Why?

1. What other industries can you think of that fit one of the three patterns noted in the chapter (dominated by foreign firms, dominated by U.S. firms, or dominated by a combination of U.S. and non-U.S. firms)?

Answer 1

Theories of comparative and absolute advantages works best in sectors like defense as US has absolute advantages in that. However theories like Hecksher Ohlin works best in sectors like Oil and gas as by this theory nations export goods which they plentifully produce at low costs.

Similarly, the US Telecommunications sector is combination of all US based firms woth Oligopolistic market structure having players namely AT&T, Verizon, Tmobile and Sprint with sizeable market shares.

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