Because of the relative ease of developing new operating systems, a company with significant market power, such as Microsoft, ma

Question

Olegator [25]

2 years ago

7

Because of the relative ease of developing new operating systems, a company with significant market power, such as Microsoft, ma

y charge less for their product to ward off potential rivals. What is this an example of?

Computers and Technology

1 answer:

Snezhnost [94] · Answer 1 · 2022-08-16T23:26:09+03:00

Answer: this is an example of a contestable market

Explanation: The theory of contestable markets is associated with the American economist William Baumol. In essence, a contestable market is one with zero entry and exit costs. This means there are no barriers to entry and no barriers to exit, such as sunk costs and contractual agreements. In this case due the competition Microsoft may charge less for their product so the barrier's trend is to go down.