tutor2u econs blog again, this time the topic is "Questions and Answers - Markets".
Unfortunately, I founf out that there is only one post under this tag. Uh, what a pity lol.
So, this post discusses the market for iPod. The post starts from a brief introduction, from which we learn that iPod has more than 80% of market share, therefore, it's a huuuuuge monopoly. Their profits are incredible even now, in the centre of financial crisis. After that they start to evaluate iPod's market position. The success of iPod is obvious - at the beginning of the 21st century Apple spotted a niche market and successfully built up a million-profit business. The post states that iPod has built up a vertical monopoly, as it is not only players - it is also iTunes (special software and online music shop), a special barrier to entry in the market - digital rights management system, which prevents people from listening iTunes music on non-Apple mp3 player. It's very hard to compete with such a giant like Apple\iPod.
Another argument is that iPod is an oligopoly, but I disagree with this, to be frank. An oligopoly is a market dominated by a few producers, each of which has some control over the market. This is the definition!!!! But the authors of that post say that behaviour of firms in oligopoly is more important and that iPod's market behaviour is pretty oligopolistic.
- strong investment in research and development
- agressive price competition
- also non-price competition
- existance of enty\exit barriers to the market
All of these are common things between oligopolistic companies' behaviour and Apple's iPod behaviour.