Technology giants possess the influence on their respective markets that create unique effects on customer demand. The smartphone industry is saturated with companies that take a significant portion of their share and supply innovative products at a rapid pace, which makes it possible for them to direct consumers. For example, Apple, Inc.’s presence in this market is immense, which is reflected in its continued growth of iPhone sales (Laricchia, 2022). This case makes it vital to assess the price elasticity of demand on smartphones through iPhones as an example.
These devices appear to experience inelastic demand due to several factors related to product specifics. One such reason comes from tech firms’ monopolistic tendencies, which disallow new entrants that will balance out the price curve. This notion is traceable through a constant stream of new models released by Apple. Simultaneously, each iPhone becomes more expensive, yet the firm does not show any adverse effects on its sales stemming from this shift, as innovative additions still attract buyers (Laricchia, 2022). It is apparent that products in this market are not sensitive to changes in this variable. The type of price elasticity represents the unresponsiveness of customers to changes in iPhone costs (Greenlaw et al., 2017). Tech companies expect such behavior among their consumer bases and base their business strategies around this factor.
In conclusion, the market for smartphones is highly inelastic, as customers are willing to pay for these devices regardless of their price tag. These products are highly in demand, and companies utilize their position to continue pushing these limits further. As seen in the example of iPhones, innovation is a perfect way to upkeep buyers’ interest in a particular good, as people strive to obtain cutting-edge technologies despite price hikes.
References
Greenlaw, S. A., Shapiro, D., & Taylor, T. (2017). Principles of microeconomics (2nd ed.). OpenStax.
Laricchia, F. (2022). Apple iPhone revenue by quarter 2022. Statista. Web.