Akamai Technologies is a dominant player in the content delivery network (CDN) market. Akamai is not very diversified (i.e., is dependent on the CDN market). If rival CDN providers such as Limelight Networks and Level 3 Communications lower their basic CDN service prices, what would be Akamai’s likely response?

Respuesta :

Answer:

The answer is: Akamai will probably lower its prices too.

Explanation:

When a company's competitors offer similar products and lower their prices, they are expecting a substitution effect to happen. This means that your customers will stop buying from you and will start buying similar substitute products from the competition at lower prices.

Akamai will probably try to avoid this from happening and the only feasible way they can do it is by also lowering their prices to match the competition's.

ACCESS MORE