Final answer:
When a wholesaler promotes one company's products over another's, brand favoritism is likely to result. This can lead to increased competition as other firms may enter the market in response, and it can affect the market share and profits of the companies involved. Workers in the less favored company might face job insecurity due to reduced business.
Step-by-step explanation:
If a wholesaler continually emphasizes and promotes one company's products over a competing company's products, brand favoritism is likely to result. This brand favoritism can have significant effects on competition within a market. For example, when a monopolistic competitor earns positive economic profits due to favoritism, it can influence market dynamics by encouraging other firms to enter the market, which may lead to intensified competition. The favored company may see an increase in its sales and market share at the expense of its competitors. This is because a wholesaler has a considerable influence on the purchasing choices of retailers, and by extension, the consumer.
Competition from firms with better or cheaper products can reduce a business's profits, and may drive it out of business, according to economic theories. Workers in the less favored company could lose income or even their jobs due to the reduced business. On the other hand, the company that receives favor may improve its profitability and enhance job security for its employees, at least in the short term.
Additionally, the emphasis on one brand can lead to homogeneity in the market where competitors might neutralize each other's marketing efforts, leaving the industrial position the same as if neither had advertised at all. However, other companies may seek to build their own reputation or offer unique products to remain competitive in a market influenced by wholesaler preferences.