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Sample Essay on Microeconomics Reflection Response

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Sample Essay on Microeconomics Reflection Response

Big companies like Alibaba and Google increase their competitive advantage in the market by moving in production of a new product line or services (Dunne et al., 2013). This move increases their primary market and in turn the demand for the companies’ products increases enormously. A good example is when Google acquired YouTube in 2006. Google at that time saw the potential market base of YouTube in years to come and led to it acquiring the video sharing site (Dunne et al., 2013). This actually increased the demand for the products from Google since it was associated with YouTube. It was like all the customers and potential customers of YouTube moved to Google and this increased its market strength (Dunne et al., 2013).

Supply of a product will reduce and be regulated by the big company when it moves into a new product line. When Google acquired YouTube, the supply of video sharing sites went down due to the competitive advantage that Google had and its reputation globally (Dunne et al., 2013).This forced out some competitors out of the market because they could not keep up. A big company like Google will use every strategy available to strain the competitors so that it can control and regulate the supply of the new product it is producing.

The demand for the new products will increase tremendously because the big company has the resources to produce high quality products at low prices. This actually snatches customers from the competitors who do not have the ability to produce the high quality products at low prices. A move by big company into a new product will increase the demand of the product while reducing the supply due to the dominance of the big company in the market.





Dunne, T., Klimek, S. D., Roberts, M. J., & Xu, D. Y. (2013). Entry, exit, and the determinants of market structure. The RAND Journal of Economics44(3), 462-487.


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