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In macroeconomics, substitutions affect the national economy and world economy. The study of a country’s economy is guided by the fundamental principles of supply-demand. The price differential represents the impact of substitutes on producers as well as the market. As consumers shift to more cost-sensitive markets it is possible to anticipate lower shares of the producer when the price of substitutes increases.<br><br>Cost of switching is an important factor in determining whether there is a risk of alternative products to a company's profits. Alternately, a lower-cost substitute product may put a ceiling on the cost of a specific product, while a higher quality alternative could increase the probability of switching. If the substitute product is of higher quality, the threat of having to replace it is not that high. 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