3. Eventually, what form of competition is likely to characterize the market for internet service? To encourage students to understand how the competitive environment affects a product's price.

Situation Assume that you own a local business that provides internet access to individuals and businesses in your community.

Yours is one of four such businesses in the local market. Each of the four companies charges the same price: $20 per month for unlimited DSL service. Your business also provides users with email service; two of your competitors also offer email service. One of these same two competitors, plus the third, also provides the individual user with a free, basic personal webpage. One competitor just dropped its price to $15 per month, and the other two have announced their intentions to follow suit. Your break-even price is $10 per customer. You are concerned about getting into a price war that may destroy your business.