Introduction Apple Inc. is a company with a legendary history, largely responsible for the development of personal computers. Apple was not the first company that has distributed a portable media player, but it appearance exceeded all predecessors: Apple was aware of the expansion of the Internet and it understood what his predecessors did not: that the future of the media ultimately will be linked to the development of trade on the Internet market. Being aware of the inevitability of change, Apple has applied the principle known as the "Law of Chum", which states that "commotion" destroy traditional and create new platforms ideal for more innovation, and according to that, the complex networks in order not only survive but also progress, …show more content…
When a producer has a little impact on the price of its product it creates a limited profit potential. As a result, a company needs to act the way market dictates. On the other hand, too much market power brings other problems along, as the Apple Inc. found to its dismay. Apple Inc. is a company with the largest market power and is therefore called a near-monopoly in the oligopolistic industry it operates in. Even though Apple Inc. operates in the oligopolistic market, since it is not the only provider in the smartphone/tablet market, or in the operating systems market, it takes a dominant market share. In order to analyze Apple’s market position, we need to differentiate between diverse market structures, to identify the market characteristics Apple operates in, to determine Apple’s market position, and eventually its market power. Literature Review Market structure refers to the physical characteristics of the markets in which companies operate. There are two market extremes out of which the first one is called perfect competition, and the second one is monopoly. Under perfect competition, no player has market power, meaning that if a company even slightly increases the price, the demand for its products falls to …show more content…
Now we will focus on the characteristics of oligopoly, since that is the market structure Apple Inc. operates in. In modern market economies oligopoly emerges as a very common form of market structure. It identifies the market condition or a branch of economic situation with an oligopolistic market characteristics that is characterized by a few sellers of products that can be substituted and which have a large cross-elasticity of demand (Perloff, 2012). Due to a small number of sellers, each individual player has a significant share of the market and the possibility of a noticeable impact on the market. If there are perfect mutual substitution products of different vendors we say that it is a pure oligopoly, and if the mutual substitution of their products is imperfect, it is a differentiated oligopoly (Perloff, 2012). Oligopolists can noticeably affect the market, but in doing so he is compelled to take into account the reaction of the masses of customers and on the reaction of its competitors. Oligopolies usually occur in heavy industry, in the production of steel, mineral resources, oil, cars, aircraft, computers and other products. Companies that produce a significant portion of output often become major players because they can produce more efficiently than small businesses and use the effects of economies of scale. Since each firm in an oligopolistic market has a relatively