Competition is a Major Role for Innovation and Incentives

Source: WBUR

The economic principle I’m exploring is “People generally respond to incentives in predictable ways” 

My research question to help me study the economic principle is “How do companies use incentives to persuade consumers to buy their phone products?”

 The article/video/etc published in ZDNet titled “Smartphones: Is there any innovation left in this market?” demonstrates this economic principle because it shows...

 First, This article brings up a great point which is whether or not cheap smartphones are able to perform in a similar fashion as the high end and overpriced phones you see from Samsung, Google, and Apple. According to David Gewirtz, from ZDNet, smartphones are becoming more and more commoditized like PCs were as we can expect simple and basic features and functions to work on cheaper phones now.

 Second, According to Gerwitz, It is now the job of apps and software in general to allow companies to innovate. I agree with this claim as I believe that companies have to now focus primarily on creating exclusive apps/features to separate themselves from other smartphone manufacturers in the consumers´ eyes. This would work similarly to the video game industry; PlayStation and Nintendo both make great exclusive games and are competing with each other, while Xbox is out of the competition.

 Third, Competition is also a key factor for companies to keep on improving. For example, if a new PlayStation game that becomes a major hit, Nintendo and Xbox are going to want to make something even better to please their fans. This works the same way for smartphone; one company makes a really cool and appealing feature/app and then others will try to top it, and by doing so will give consumers an incentive to purchase their products.