CASE STUDY 4- International Convergence of Tastes

1. What condition(s) international convergence to taste?

Globalization is what conditions international convergence to taste. As we all

know, globalization made it easier for countries across the globe to be interconnected. It
enabled a vast majority of people to gain influences from diverse sets of cultures.
Convergence of tastes has made a tremendous change in the lifestyles of many
individuals. Convergence would not have flourished without globalization. International
convergence of taste has significant impacts on various industries around the world. It
exhibits how competitive countries can get whilst promoting their products. It is vital for a
nation to promote their own products internationally, as it can boost their economic
situation.
The frequency with which individuals move from one location to another
throughout the world. People that travel a lot find or experience new things that they truly
appreciate, and after having a fantastic time, they introduce them to other people. As a
consequence of customers' frequent travel, the disparity in product choices will be
lessened.

2. How does this convergence promote consumer welfare?

Convergence is when consumers and producers in one country adopt
technologies that were originally developed in other countries. It is an important driver of
market globalization and has positive effects on consumer welfare. One of these
advantages is that consumers can access more choices as they can buy products and
services from other countries. By providing consumers with more choice, convergence
may also drive innovation and competition among suppliers. When there are many
product options available, suppliers must differentiate their offerings from those of their
competitors in order to attract business. To the extent that these differentiations create
added value for consumers, and that incentive structure leads to greater innovation by
firms, convergence will encourage a more vibrant marketplace.
Next is that information technology allows for greater customer empowerment
through increased access to information about prices and the quality of goods and
services. As a result of convergence, manufacturers will be able to reach a larger market
through standardized technologies. In addition, consumers will benefit from lower prices
due to increased competition among businesses that can reach international markets
more easily due to standardized technologies that allow them to communicate efficiently
with each other across borders. The result is an exponential increase in the number of
choices available to consumers. In return, cases of fraud and other forms of deception
can be ruled out.
All in all, the world has become a more consumer-friendly place. Globalization
and technological progress are rendering the provision of goods and services cheaper,
simpler, and more reliable. Convergence allows businesses to integrate more easily with
one another and will help foster the development of new innovative products based on
common, widely accepted standards.

CASE STUDY 5- Substitution between Domestic and Foreign Goods

1. What promotes substitution in this reading? How?
The reading indicates that the price changes promote substitution. The buyer
tends to look for alternative products when prices increase, whether it be domestically or
foreign. In current times, more products have become more substitutable, in a sense that
the consumers can easily replace what they already have been purchasing. The
readings utilize automobiles as the main example as this has an increasing amount of
production facilities located all around and has an increase in importation caused by
globalization that has brought about foreign and domestic goods to become more
substitutable to each other. In addition, more effective dissemination of the imported
goods makes it simpler for the buyer to substitute for these items. At long last, the
presence of foreign firms within the industry too may lower data costs for residential
buyers and increment substitution between domestic and remote products.
2. Explain and Illustrate how substitution promotes consumers' welfare.
The substitution effect, which is due to consumers changing to cheaper items as
costs increase, can be both positive and negative for customers. The substitution impact
is positive for customers since it implies that they can proceed to bear a specific item
indeed on the off chance that costs increase or their livelihoods decline. The substitution
impact is positive for consumers in the event that they can proceed to purchase the
items they adore. Be that as it may, in testing the substitution impact, a company may
well be deterred from aiming to advertise with an imaginative modern item. Lower-priced
choices can now and then result in a lower quality product.