do not have sufficient yield, its prices surge. For example, when vegetables like potato, onion, etc. Firstly, it can happen due to the shortage of supply. The perfect example is of bags in footpath Vs bags with a brand name in shopping malls.Ī captive market can happen due to many reasons. They take the price determined by the seller for the same product, which they could have bought from other places by hardcore bargaining. Moreover, like monopoly market, captive market exercises barriers to entry.Ībove all, people don’t have the opportunity to bargain. ![]() Therefore, in captive markets, consumers are captivated by the limited number of sellers and they are compelled to either buy their desired product only from there or refrain from purchase. ![]() This accounts for lesser competition and a monopoly power of the seller to determine the price.Īs a result, products available at a cheaper rate in the normal market is sold at extremely high prices in the captive markets. Products which are readily available in the normal market and can be purchased in a perfectly competitive environment are sold by the limited number of sellers in the given area.
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