In the case of a firm, the incentive to work harder for a lower price.
In the case of an industry, the incentive to grow bigger and sell more of the same product at a lower price.
A firm has an incentive to grow because it has to sell more products and make more money. A firm has an incentive to grow because its customers have the same goal of getting bigger and cheaper.
It’s a good thing that the two competing tendencies in an oligopolistic industry are not mutually exclusive. But if you’re in an oligopolistic industry like that, it can be hard to determine which one is the primary incentive. This makes it a good idea to have an outsider, like me, come in and check the incentives. If the incentives to sell more products and make more money are overwhelming, it can be hard to determine which would be the primary incentive to grow.
One way to do this is to ask yourself: Is the primary incentive to grow because I want to make more money? If, the primary incentive is the other way around, you can make a decision.
There’s a difference between a primary incentive and a secondary incentive. A primary incentive can be determined by the “I want to make more money” principle. A secondary incentive can be determined by the “I’m looking for a promotion” principle. To determine which one is primary, you have to look at the incentives that exist together.
A primary incentive is one that is in my control. For example, a company wants to grow because they believe they can expand and make more money. A secondary incentive is one that doesn’t give them any control. For example, if your company is a restaurant, they don’t want you to take away your meal because you are the competitor.
These two types of incentives are called the “incentive to expand” and the “incentive to reduce”, respectively. In the case of incentives to expand, the incentive is in my control because I have a plan. In the case of incentives to reduce, the incentive is not in my control. For example, my company is paying off debt, which means they have to make more money in the future to pay off the debt.
The incentive to reduce is more difficult to resist. When your customers are so loyal to your company that they are willing to sacrifice the quality of their meal so that you can make more money, it is easy to convince them to reduce the quality of their meal. However, when your customers are so loyal to you that they are willing to give up the quality of their meal so that they can make more money, it is difficult to convince them to reduce the quality of their meal.
So it’s no surprise that a firm’s incentive to reduce a firm’s price is often more difficult to resist than an oligopolistic firm’s incentive to increase its price. This is especially true when the firm’s price is being reduced by competitors, even if it is their own employees. This is because the firms who have the incentive to reduce the quality of their customers’ meals can’t compete with their own quality.