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Essay / Research Paper Abstract
This 3 page paper looks at the concept of the dominant firm, what it is and how it manifests as well as applying the concepts of managerial economics to the model of the dominant firm. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEdomfirm.rtf
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Unformatted sample text from the term paper:
as a result of influencing factors, such as number of competitors regulation and demand. The dominant firm will occur in an oligopoly. In an oligopoly there are either only
a few operators, or the market is dominated by only a few operators, even if they are operating under subsidiary companies. If there are a large number of companies then
the majority of the market place will be one where there are only a few major companies (Thompson, 2007). In a low population oligopoly there are few competitors.
The dominant firm is one that is able to command the majority of the market share, this places it in a very dominant or
powerful position in the market place, it is also a position that has the potential to be abused with the use of anti competitive behavior. The dominant firm is in
a price setting position, the smaller firms are then price taking firms (Nellis and Parker, 2000). The dominant firm can often be a profit maximizing firm, with control
of the market and the influence it is able to optimize the price charged against the average total costs (Nellis and Parker,. 2000).
There are a number of examples of this model, however it is one that is generally seen as unhealthy on an industry where competition can serve to benefit consumers as
well as drive forward innovation. An example of the dominant firm may be seen with Microsoft and the sale of computer operating systems, and to a lesser extent the office
and other complimentary applications The dominant firm will not want to use predatory pricing, as they already have the high market share. Predatory pricing may help to reduce
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