Consider this: Lee Peterson has invented a new product that detects water leaks
ID: 402777 • Letter: C
Question
Consider this: Lee Peterson has invented a new product that detects water leaks due to broken pipes and sends out an alarm similar to a smoke alarm. However, Lee has very little personal money to invest in this new product. He finally raised enough money to enter the market and began to experience some success. The product was not patentable because it was too similar to other existing technologies. Major corporations saw his success and have now entered the market with competing products. Provide your perspective on this scenario, and discuss the probable destiny of Lee Peterson's company.
200 or more words would be helpful.
Please provide references in APA format.
Explanation / Answer
Product differentiation has helped Lee Peterson gain success. This is a monopolistic competition scenario, where entry isn't impossible , but difficult and product differentiation is the key to survival. There may be profits in the scenario but monopolistic market approaches perfect competition in real life. In the long run, there will be many entries and exits and no profits, therefore Lee Peterson may be successful now but since the product is not patentable, there will be soon copied products in the market, with his business cycle taking a downturn. Market will slow approach perfect competition and attain no profit situation.