Suppose that the only competing suppliers of Internet services are NewServices and RealWest. At present, they...

 

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Suppose that the only competing suppliers of Internet services are NewServices and RealWest. At present, they each have 50% of the market share in their community. However, NewServices is upgrading their connection speeds but at a higher cost. Be- cause of this, each month 30% of RealWest's customers will switch to NewServices, while 10% of NewServices customers will switch to RealWest. (a) What will be the market share of each company after the first two months? (b) How about in the long run? Suppose that the only competing suppliers of Internet services are NewServices and RealWest. At present, they each have 50% of the market share in their community. However, NewServices is upgrading their connection speeds but at a higher cost. Be- cause of this, each month 30% of RealWest's customers will switch to NewServices, while 10% of NewServices customers will switch to RealWest. (a) What will be the market share of each company after the first two months? (b) How about in the long run?

Answer rating: 100% (QA)

a After the first month NewServices gains 30 of RealWests customers 30 of 50 15 increase in market s... View the full answer