Home Value Inc., Max Cart Inc., and Nice Necessities Inc. are three consumer-product retailing companies. Their products consist primarily of day-to-day items that are easy to imitate and sell. All three companies use the same resources and capabilities in the production and distribution of their products. Judging from the market conditions described in this scenario, which of the following statements is true?
A) Resource immobility of the firms will be low.
B) The industry structure will be far from perfect competition.
C) Barriers to entry within the industry will be high.
D) Any advantage that one firm has will be short-lived.

Question

Quizplus · Accepted Answer

If a resource is common, it will result in perfect competition where no firm is able to maintain a competitive advantage. In perfect competition, all firms have access to the same resources and capabilities, ensuring that any advantage that one firm has will be short-lived.