Dominant firms exploit passive competitors, shaping market dynamics in industries.
The article discusses how some firms in industries are more dominant than others, leading to different ways of modeling their interactions. One way is to see passive firms as competitive fringe firms that don't consider their impact on market prices. Another way is to view them as followers who adjust their production based on dominant firms' decisions. The choice of approach depends on the industry's concentration. In highly concentrated industries, the Stackelberg approach may be more suitable.