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Differences between oligopoly competition and monopoly competition
Summarise the market structures
Summarise the market structures
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Market Structure and the Role of Government
1. Market structures are unique in their own sense of how they react and what effects they will have on the industry. For instance, having market structure in an industry deals with products and being aware of how many firms are competing for this particular item in the industry. This is where oligopoly, perfect competition, monopoly and monopolistic competition come in to play. They have a uniqueness about them that draws competing firms to want to be involved. Oligopoly is considered to be structured in healthcare market because it deals with both sides (buyers and seller) and is few in number (p 487). Due to their competiveness there level of production is low depending on whether or not they
Product differentiation can affect the demand for a product in many ways it distinguishes a product or service to make it more attractive to a specific market and caters to people of specific bracket. Differentiation of a product is done in order to show the uniqueness of a particular product making it more attractive with a sense of value to a firm. It is also one of the defining traits of a monopolistic competitive market showing that there is not a significant amount of competition. By doing so it reduces direct competition because of its differences it makes it less attractive for market competition (Boundless, 2015). It also improves the availability for individuals rather that for a particular market. Because of its uniqueness one is able to draw more from a single dweller than from a particular
M. (n.d.). Eyeing the Four Basic Market Structures. Retrieved January 13, 2016, from http://www.dummies.com/how-to/content/eyeing-the-four-basic-market-structures.html
Hicks, L. (2012). Economics of health and medical care (6th ed.). Burlington, MA: Jones & Bartlett Learning
Boundless “Long Run Outcome of Monopolistic Competition.” Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 13 Jan. 2016 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/monopolistic-competition-12/monopolistic-competition-75/long-run-outcome-of-monopolistic-competition-284-12381/
Boundless. “Product Differentiation.” Boundless Economics. Boundless, 21 Jul. 2015. Retrieved 13 Jan. 2016 from https://www.boundless.com/economics/textbooks/boundless-economics-textbook/monopolistic-competition-12/monopolistic-competition-75/product-differentiation-281-12378/
Riley, G. (n.d.). Government Intervention in Markets | Economics. Retrieved January 13, 2016, from
The Postal Service Monopoly In the United States economy most markets can be classified into four different markets structures. But, each and every market in the United States is completely unique from the others. Generally the best type of market structure for the general public is per- fect competition because it creates the lowest possible price for the public.
An oligopoly is defined as "a market structure in which only a few sellers offer similar or identical products" (Gans, King and Mankiw 1999, pp.-334). Since there are only a few sellers, the actions of any one firm in an oligopolistic market can have a large impact on the profits of all the other firms. Due to this, all the firms in an oligopolistic market are interdependent on one another. This relationship between the few sellers is what differentiates oligopolies from perfect competition and monopolies. Although firms in oligopolies have competitors, they do not face so much competition that they are price takers (as in perfect competition). Hence, they retain substantial control over the price they charge for their goods (characteristic of monopolies).
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
A perfect competition is a microeconomics idea that depicts a market sector structure controlled totally by market sector powers. In a perfectly competitive market sector, all organizations offer indistinguishable products and services. Firms could not control winning market sector costs, piece of the overall industry per firm is little, firms and clients have immaculate learning about the market, and no boundaries to passage or way out exist. If by any chance that any of these conditions are not met, a market sector is not perfectly competitive. Perfect competition is a conceptual idea that happens in economics aspects course books. However, not in this present reality. Imperfect competition, in which a focused market sector does not meet
The term monopoly has been defined Mankiw (2011) as the business, firm or organisation that “is the sole seller of a product without closed substitute” (p. 300). This simple definition uses term “product” in broad meanings, which includes technologies, research, processes and services (Coase, 2013). The research surrounding monopolistic market structures have argued that there are certain features ...
Differentiation through distribution, including distribution via mail order or through internet shopping. For example u can buy Monster from Amazon.com.
A perfectly competitive market is based on a model of perfect competition. For a market to fall under this model it must have a number of firms, homogeneous products, and easy exit and entry levels into the market (McTaggart, 1992).
Price competition among rivals is close to nil, industry participants are very competitive when it comes to product differentiation. Product offerings to satisfy consumer demands include a variety of coffee, juices, muffins, bagels, cookies, cream cheese sandwiches, soups and other miscellaneous items.
industry. The. Thus, not many firms dare to venture into the industry. therefore oligopolies can earn abnormal profits in the long run as well, unlike firms in monopolistic competition. In monopolistic competition there are no barriers to entry or exit, so as with oligopolies, in short run they earn abnormal profits, but they.
The. An oligopoly is a market structure characterised by few firms and many buyers, homogenous or differentiated products and also difficult market entry (Pass et al. 2000) an example of an oligopoly would be the fast food industry where there is a few firms such as McDonalds, Burger King and KFC that all compete for a greater market share. In a Monopoly, there is one firm that controls the market, and there are no similar products being sold by other companies. Advertising is therefore used to encourage people to buy more of their product. In a monopoly there is a downward sloping demand curve, the reason for this is that a firm must lower the price to sell an extra unit of their product.
Reinhardt, F.L. 1998, "Environmental product differentiation: Implications for corporate strategy", California management review, vol. 40, no. 4, pp. 43-73.
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).
The Perceived Demand Curve for a Perfect Competitor and Monopolist (Principle of Microeconomics, 2016). A perfectly competitive firm (a) has multiple firms competing against it, making the same product. Therefore the market sets the equilibrium price and the firm must accept it. The firm can produce as many products as it can afford to at the equilibrium price. However, a monopolist firm (b) can either cut or raise production to influence the price of their products or service. Therefore, giving it the ability to make substantial products at the cost of the consumers. However, not all monopolies are bad and some are even supported by the
Markets have four different structures which need different "attitudes" from the suppliers in order to enter, compete and effectively gain share in the market. When competing, one can be in a perfect competition, in a monopolistic competition an oligopoly or a monopoly [1]. Each of these structures ensures different situations in regards to competition from a perfect competition where firms compete all being equal in terms of threats and opportunities, in terms of the homogeneity of the products sold, ensuring that every competitor has the same chance to get a share of the market, to the other end of the scale where we have monopolies whereby one company alone dominates the whole market not allowing any other company to enter the market selling the product (or service) at its price.
The modern theory of price discrimination began with the work of Arthur Cecil Pigou (1877- 1959) and is defined by Machlup (1955): "Price discrimination may be defined as the practice of a firm or group of firms of selling (leasing) at prices disproportionate to the marginal costs of the products sold (leased) or of buying (hiring) at prices disproportionate to the marginal productivities of the factors bought (hired)". But in simpler terms, "price discrimination is often defined as charging different customers different prices for the same or highly similar offering" (Smith, 2004). The motive behind this is to increase profit by reducing consumer surplus. If the same price is charged to all consumers, some potential revenue is lost since some of the consumers would have been prepared to pay more. But before answering the question of whether firms should price discriminate or not, we will have to distinguish between the various types of price discrimination and before that it is important to note that there are three necessary conditions for a firm to practise price discrimination, namely, the firm must be a price maker, the elasticity of demand must be different in the different markets and finally, the market must be clearly separated.