Final answer:
Competing technologies in the introduction stage can lead to reduced production costs and product innovation, offering firms a temporary competitive edge.
However, this edge diminishes as competitors catch up, initiating continual market evolution and technology adaptation.
Step-by-step explanation:
When competing technologies are in the introduction stage, several outcomes can occur due to market competition. Companies strive to innovate to gain a temporary edge and earn above-normal profits.
As they introduce new technology, they can reduce production costs or create products with desirable features that attract consumers. This competitive advantage, however, is typically short-lived as other firms catch up, leading to a cycle of continuous improvement and innovation within the industry.
In a perfectly competitive market, introducing a new technology that significantly reduces production costs can lead to an industry-wide shift as competitors adopt the new technology to stay relevant.
If companies do not adapt, they may fall behind and potentially exit the market. Conversely, when one input becomes more expensive, firms will adapt their production technology to use less of that input or find a cheaper alternative, highlighting the dynamic nature of market competition and technological advancement.