Forms Of Industrial Organizations

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Forms of Industrial Organizations

Based on production and selling environment economists group industries into market structures. There are four basic market structures namely: (1) pure competition, (2) monopoly, (3) oligopoly, and (4) monopolistic. Differentiating factors of the four markets include, ease of entrance or exit, the number of firms within the industry, and availability of substitutions. It is not uncommon for a market to begin as one type of structure and evolve into another. The following paper will discuss the four different market structures as well as explain the life cycle and progression of the All-Optical Notebook Computer Industry

Pure Competition

Monopoly

Oligopoly

The third type of market structure available in today’s market industry is an Oligopoly. "An oligopoly involves only a few sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals and must take those decisions into account in determining its own price and output" ( Brue & McConnell, 2004, p. 3,4). Examples of an oligopoly can be found in the petroleum industry. Shell and Texaco for example must consider a number of different factors when trying to increase revenue. Due to the limited number of petroleum companies in the market, companies must depend on low level sellers to make price adjustments weekly to capitalize on demand. As with most oligopolies some price variation is necessary to maintain healthy profits. Companies like Texaco and Shell should make note however that too much deviation in price can create an unstable product market. Many companies in an oligopolistic market will use consumer perks to assist with price deviation. Texaco and Shell, for example, offer incentives su...

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Business Week, 3601. P. 58-64. Retrieved November 1, 2008, from EBSCOhost database.

Brue, S. L. and McConnell, C. R. (2005). (16th Ed.). Economics: Principles, Problems, and

Policies. New York: The McGraw-Hill Companies.

Carvajal. D (2005). Water, bottled water everywhere. International Herald Tribune. Retrieved

November 1, 2008, from http://www.iht.com/articles/2005/02/11/business/wbwater.php

Keaten, Jamey (2000) De Beers Buffs Its Image retrieved from the internet on November 1, 2008

from http://money.cnn.com/2000/08/25/europe/diamonds/

Peterson, Wallace (2008) Monopoly, Microsoft® Encarta® Online Encyclopedia

Retrieved from the internet on October 26, 2008 from http://encarta.msn.com

Stein, Nicholas, (2001) The De Beers Story retrieved from the internet on October 26, 2008

from http://money.cnn.com/magazines/fortune/fortune_archive/2001/02/19/29686

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