wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Byju's Answer
Standard XI
Economics
Monopoly Impacts and Government Interventions
According to ...
Question

According to Porter, which one is usually the most powerful of the five competitive forces __________.

A
potential development of substitute products
No worries! We‘ve got your back. Try BYJU‘S free classes today!
B
bargaining power of suppliers
No worries! We‘ve got your back. Try BYJU‘S free classes today!
C
rivalry among competing firms
Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses
D
bargaining power of consumers
No worries! We‘ve got your back. Try BYJU‘S free classes today!
Open in App
Solution

The correct option is C rivalry among competing firms
According to Porter, Rivalry among competing firms is usually the most powerful of the five competitive forces.

flag
Suggest Corrections
thumbs-up
0
similar_icon
Similar questions
Q. Porter's Forces Analysis assumes that there are important forces that determine competitive power in a business situation. These are:
I. Supplier power, Threat of new entry
II. Supplier power, Buyerpower, Competitive rivalry
III. Supplier power, Competitive rivalry, Threat of new entry.
IV. Supplier power, Buyer power, Competitive rivalry, Threat of substitution, Threat of new entry.
Select the correct answer from the options given below -
Q. According to the Porter's Five Forces Model, which one of the following is not a competitive force for a firm?
Q. Porter's __________ Analysis assumes that there are five important forces that determine competitive power in a business situation.
Q. One type of violation of the antitrust laws is the abuse of monopoly power. Monopoly power is the ability of a firm to raise its prices above the competitive level—that is, above the level that would exist naturally if several firms had to compete—without driving away so many customers as to make the price increase unprofitable. In order to show that a firm has abused monopoly power, and thereby violated the antitrust laws, two essential facts must be established. First, a firm must be shown to possess monopoly power, and second, that power must have been used to exclude competition in the monopolized market or related markets.
The price a firm may charge for its product is constrained by the availability of close substitutes for the product. If a firm attempts to charge a higher price—a supracompetitive price—consumers will turn to other firms able to supply substitute products at competitive prices. If a firm provides a large percentage of the products actually or potentially available, however, customers may find it difficult to buy from alternative suppliers. Consequently, a firm with a large share of the relevant market of substitutable products may be able to raise its price without losing many customers. For this reason courts often use market share as a rough indicator of monopoly power.
Supracompetitive prices are associated with a loss of consumers’ welfare because such prices force some consumers to buy a less attractive mix of products than they would ordinarily buy. Supracompetitive prices, however, do not themselves constitute an abuse of monopoly power. Antitrust laws do not attempt to counter the mere existence of monopoly power, or even the use of monopoly power to extract extraordinarily high profits. For example, a firm enjoying economies of scale—that is, low unit production costs due to high volume—does not violate the antitrust laws when it obtains a large market share by charging prices that are profitable but so low that its smaller rivals cannot survive. If the antitrust laws posed disincentives to the existence and growth of such firms, the laws could impair consumers’ welfare. Even if the firm, upon acquiring monopoly power, chose to raise prices in order to increase profits, it would not be in violation of the antitrust laws.
The antitrust prohibitions focus instead on abuses of monopoly power that exclude competition in the monopolized market or involve leverage—the use of power in one market to reduce competition in another. One such forbidden practice is a tying arrangement, in which a monopolist conditions the sale of a product in one market on the buyer’s purchase of another product in a different market. For example, a firm enjoying a monopoly in the communications systems market might not sell its products to a consumer unless that customer also buys its computer systems, which are competing with other firms’ computer systems. The focus on the abuse of monopoly power, rather than on monopoly itself, follows from the primary purpose of the antitrust laws: to promote consumers’ welfare through assurance of the quality and quantity of products available to consumers

Q. Would the use of leverage meet the criteria for abuse of monopoly power outlined in the first paragraph?
Q. According to conventions, the power of corrective lens used for which defect has a positive power?
View More
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
The Monopoly Problem
ECONOMICS
Watch in App
explore_more_icon
Explore more
Monopoly Impacts and Government Interventions
Standard XI Economics
Join BYJU'S Learning Program
book_image
AI Tutor
book_image
Textbooks
book_image
Question Papers
book_image
Install app
CrossIcon