igh barrier to entry. Typically the differentiated products are custom-built solutions that can only be provided by companies of the size and stature of a big six consulting firm or an internationally know organization such as Oracle or SAS. There are very high barriers to entry to compete in this market since the clients to this product are looking for large-scale international support. In order to implement a sophisticated differentiated product like Oracle financials or SAP, a company needs to retain an enormous overpaid staff of software engineers to develop, support, and implement such solutions. Very few companies are capable of retaining and / or attracting the staff necessary to provide such solutions. However, every large company is dependent on this information technology to maintain their financial, budget, inventory, production, and customer information. Just as most Americans are dependent on our automobiles for transportation. I make the comparison to the automobiles because the automobile industry is an excellent example of an oligopoly. The computer industry is an example of a competitive price-searchers market because firms can freely enter and exit the market and profits and losses play an important role in determining the size of the industry. Economic profits are attracting new competitors to the market. The increased availability of the computers and software are driving the price down until the profits are almost completely eliminated. These economic loses are beginning to force competitors to exit from the market. Eventually the decline in available computer related service would allow Information Technology (IT) firms to increase their price until they are able to cover their total costs. Change in Demand The demand curve of the IT industry is a downward slope due to the change in revenue caused by a price-searcher market. A firm faces this curve because of the price reduction that causes increased sales will exe...
