Question

The following excerpt is from​ "Throwing the Book at​ Apple" ​(Wall Street​ Journal, Review and​ Outlook, June​ 12, 2013): At the​ time, prior to the existence of the tablet device market that Jobs created with the​ iPad, Apple did not sell eminus−books. Amazon sold nine of every 10. Justice claims Jobs then forced Amazon and every other eminus−book distributor to adopt a new eminus−book pricing model that harmed consumers. Yet the average retail price for​ "trade" eminus−books has since dropped to​ $7.34 from​ $7.97, and​ Amazon's Kindle is still the industry leader with Apple trailing in third. Over the same period readers bought​ 447% more eminus−​books, and they can choose from dozens of tablets for titles and other media content.
What market structure best describes the e - book market?
A. A monopoly
B. A perfectly competitive market
C. A competitive market with a few dominant firms producing identical goods
D. A competitive market with a few dominant firms producing substitutes

Answer 1

Answer:

D. A competitive market with a few dominant firms producing substitutes

Explanation:

E book market has few dominant firms - Amazon, Apple.

Their e - book selling digital services have uniquely different features from each other. They serve similar nature of good ie e books contests. So, the digital services rendered by firms are substitute of each other.

Providing substitute goods, firms compete with each other.

As per technical economic terminologies : this market structure is analogous to Oligopoly market structure.