Introduction
When discussing microeconomics, there are several market structures that may have an impact the economy in the Village of Forest Park, Illinois. These market structures including perfect competition, monopolistic competition, oligopoly, and monopoly have many characteristics and have an impact on the market as a whole. There are many barriers to entry, competitive pressure and price elasticity that also impact the economic growth of the village. Other areas that affect the village’s economy include governmental roles and international trade.
Two Characteristics of the Four Market Structures
The major market structures that impact our current economy are perfect competition, monopolistic competition, oligopoly, and monopoly.
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The opposite of a perfect completion is another market structure called a monopoly. A monopoly is a situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products (Investopedia, 2014). A characteristic of this market structure is when there is a single supplier, which carries a unique product, or service, which dominates the entire market. There is a high barrier to entry in a monopolistic market due to other firms being unable to enter the market easily to provide the product or service at a competitive price.
A monopolistic competition describes a common market structure in which firms have many competitors or sellers, but each one sells a vaguely distinctive product or service. One of this market structure’s characteristics is that each individual firm makes independent decisions about price and output, based on its product, its market, and its costs of production (Economics Online, 2015). Another characteristic is there is freedom to enter or leave the market, since there are no major barriers to entry or exit. The opposite of this market structure is an oligopoly. Oligopoly means few sellers. Oligopoly is the market structure in which there are only a few firms or a few firms dominate the market (Amacher & Pate, 2013). In an oligopolistic market, each seller supplies a large
The following case study is in regards of economic market structure. In the world of economics all businesses or companies rather, are categorized in certain market structures such as monopoly, oligopoly, or perfect competition, for instance, the market structure for restaurants. Most restaurants are considered monopolistic competition. Being that they all sell and serve food. They have to have instances that vary such as price, logos, servers, locations, décor, types of food, and hospitality.
There are a variety of different business structures that comprise the market in the world today. The most common ones found in the business world today are sole proprietorships, partnerships, and corporations. From these you will also find monopolies and oligopolies. Economists assume there are a number of different buyers and sellers in the market which leads to competition which allows prices to change in response to changes in supply and demand.(1) In many industries you there are substitutes for products, so if one type of product becomes too expensive the consumer can choose an alternative product that is cheaper, or one of better quality.
An oligopolistic market is one that has several dominant firms with the power to influence the market they are in; an example of this could be the supermarket industry which is dominated by several firms such as Tesco, Sainsbury’s, and Waitrose etc... Furthermore an oligopolistic market can be defined in terms of its structure and its conduct, which involve various different aspects of economics.
There are many models of market structure in the field of economics. They include perfect competition on one end, monopoly on the other end, and competitive monopoly and oligopoly somewhere in the middle. In this paper, we will focus on the oligopoly structure because it is one of the strongest influences in the United States market. Although oligopolies can also be global, we will focus strictly on the United States here. We will define oligopoly, give key characteristics important to the oligopoly structure, explain why oligopolies form, then give an example of an oligopoly in today’s economy. Finally, we will discuss the benefits and costs in this type of market structure.
A. perfect competition and monopolistic competition B. duopoly and imperfect competition C. duopoly and triopoly D. monopolistic competition and oligopoly
The structure of a market is defined by the number of firms in the market, the existence or otherwise of barriers to entry of new firms, and the interdependence among firms in determining pricing and output to maximize profits. Retail sales are indicators of microeconomic conditions presented in a given area at a particular place in time. Since Sam Walton opened his first Wal-Mart store, Wal-Mart has been making ripples throughout the micro economies of America. Wal-Mart’s market structure is typical of most of our nation’s largest corporations in that they are an oligopoly (Brown, 2010). According to Colander (2010), “An oligopoly is a market structure in which there are only a few firms and
We will need to analyze each market separately to show the differences and the similarities so as to understand their effects on the community and whether they allow room for entry and exit of new firms in order to grow our city economically. There are four market structures that I will provide analysis on. Perfect competition is a market structure in which there any many sellers and many buyers where not one firm (business)
There are essentially three economic market structures that create completion barriers within their given market. These structures are corporate monopolies, oligopolies, and conglomerates. Though they all have the similarity of limited competition, they also hold some distinctions as well. Monopolies are market structures that contain one dominating, wealthy corporation. Monopolistic firms use anti-competition practices to create hardship for competitors making it nearly impossible to enter or compete in the same market (Friedrichs, 2010, p.86). However, the Sherman Antitrust Act in 1890 made monopolies illegal, so now large corporations have shifted away from monopolizing practices and lean towards oligopoly and conglomerate market structures
An oligopoly is a market situation (or industry) in which there are few sellers. These sellers are
Oligopoly refers to an industry dominated by a small number of sellers with market power. They have the ability to limit or discount competition, and artificially earn excess profits. U. S. cell phone providers are often cited as a clear example of oligopoly, as the major providers effectively control the market. They set market prices for their goods or services. Barriers to entry are high, from capital investment to government permission to enter a market. They are notable by profit levels above that driven by competitive models, as they set the market price. They do have a unique interdependence, as market actions taken by one
I have been hired as a consultant by the mayor to look at the various market structures. In order to fully analyze the market structures I will explain in depth the different types of market structures, one example of a market structure here in Smallville, Ohio, I will also share how high entry barriers into our market will affect the profitability in the long term sense, competitive pressures that are present in high barriers to entry, the role of the government and how it affects each of the different market structures ability to price its products and the effect of international trade on each of the different market structures. This in depth look will hopefully help they mayor understand all of the market structures and how they
Since monopolistic competition or oligopolistic market structures are the most commons in the United States, it would be very interesting to actually analyse more of the monopolistic structure industry and how that impacts the economy overall. In order to understand more about the monopolistic industry is important to understand the fundamental of this industry.
Market structures are very important and understanding the structures can let too smooth operation of an industry. There are many factors that contribute to the success of a market like, buyers, sellers, pricing, and the productivity. Monopoly, oligopoly, perfect competition, and monopolistic competition are the different types of market structures.