Oligopoly is a market structure containing a small number of relatively large firms that often produce slightly differentiated output and with significant barriers to entry. Monopoly is a market structure containing a single firm that produces a good with no close substitutes and with significant barriers to entry. While it might seem as though the difference between oligopoly and monopoly is clear cut, such is not always the case.…
Assume an oligopolist confronts two possible demand curves for its own output, as illustrated below. The first (A) prevails if other oligopolists don’t match price changes. The second (B) prevails if rivals do match price changes.…
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. This is called perfect competition within different companies. However, in some industries there are no substitutes for a product. In a market with only one supplier of a good or service, the producer can control the price meaning that the consumer does not have a choice, cannot maximize his or her total utility, and has very little to no influence over the price of the good or service they require. This is called a monopoly, where the single business is the industry. In slight contrast, you have the oligopoly which is at least two companies competing for market share. In an oligopoly, products are usually very similar, if not identical to each other, and in order to make their product more attractive they will lower their prices, forcing the other one out of the market until that firm lowers their price. Finally, the fourth type of business structure is called monopolistic competition. Like an oligopoly, these firms produce similar or identical products where substitute products usually aren’t available, although monopolistic competition is between many firms, where an oligopoly is usually two or three different companies controlling the market. In monopolistic competition, a firm takes the prices charged by its rivals as given…
more difficult than under pure competition but not nearly as difficult as under pure monopoly.…
1. Analyze the fast food industry from the point of view of perfect competition. Include the concepts of elasticity, utility, costs, and market structure to explain the prices charged by fast food retailers.…
Woolworths and Coles continue to extend their dominance in the grocery market and more recently petrol. This has been extended and they are now looking to expand their hold on the Australian market by moving into the liquor industry. Julian Lee (2008) highlights Coles and Woolworths move into the industry, by trying to build on their previous acquisitions of liquor outlets to challenge the major brands for a share of the $6 billion per year Australian beer market. The article reveals that Coles and Woolworths plan to ‘give more space to their own beers and promote the beers in their hotels’. The beer market has so far been resistant and has retained a strong brand loyalty. Coles and Woolworths are competing against each other and relying heavily on price discounting and forming supplier contracts to attain exclusive supply. The article questions whether or not these oligopolies will be as successful as previously in attaining their complete dominance because ‘home or exclusive brands’ are currently only a small component of the market.…
1. What are the characteristics of a monopolistically competitive market? What happens to the equilibrium price and quantity in such a market if one firm introduces a new, improved product?…
There are plenty of companies in America today that are controlled by a monopolistic market. Although there may be a few that are controlled as a monopoly market, while there are a few that are out there such as the Gas and Electric Company, SDG&E and the USPS. It can be difficult when you are going from a monopolistic firm to a monopoly only because the market is completely different from one another. When it comes to Wonks, there are plenty of beneficiaries when we analyze the differences of going from one to another.…
Let us know examine all the characteristic of each market structure. Start first with competitive market, it mains set-up is based on a large amount of sellers in the market. The bigger the size of the sellers and buyers, the least bargaining margin will be available for the market. The reason for this is because if you went to a local farmers market and three sellers were selling beautiful, large, red apple for 2 @ $1.00 and one sellers was selling the same apples for $.75, competitive market would be exercised because you would select one of the sellers with the smaller price. Now let us look at monopolies, according to AmosWeb “the four characteristics of monopoly are: (1) a single firm selling all output in a market, (2) a unique product, (3) restriction on entry into and exit out of the industry, and more often than not (4) specialized information about production techniques unavailable to other potential producers.” No secrets are shared with other sources because there is no else producing such…
What are examples of monopolistically competitive firms in your local area? Please make sure to relate your examples to the characteristics of the markets. Why is advertising/marketing, so important in this particular market?…
(Note that second page has some partial answers so that you can check yourself. I think these are correct, but I did it quickly. So I will offer one bonus point per mistake for the first person who finds the mistake in my answers with a maximum of 3 points per student.):…
When evaluating today’s economic status we must take a look at many different factors. Such as interest rates, inflation and unemployment. When we look at these factors and compare them to the factors of the recession of 2008 we will see that the economy has gotten better in some aspect and some aspect have gotten worse.…
Sloman, J., and Hinde, K. (2007). Economics for business, 4th edition. Essex: Pearson Education Limited.…
Market structures are very important in Monopoly. It provides he basis topics such as industrial organization and economics of regulation. Traditional economic analysis, perect competition, monopolictic competition, oligololy, and monopoly are the four types of market structures. Monopoly versus competitive markets is a challenge. They are similar due to the fact that they both minimize costs and maximize profit. Presiding over eachothers territory can cost millions. Many governments regulate monopolies because a monopoly market lacks the benefts of competition. The U.S. Governement appiles laws against monopoly behavior by Microsoft not allowing big companies in some industries. The Government permits certain monoplies in exchange for regulating their activites.…
One way of differentiating between market structures is to compare and contrast them; public goods, private goods, common resources, and natural monopolies are a good place to start. Public goods, private goods, common resources, and natural monopolies all provide some type of products or service to people. Private goods are both rival and excludable, which means that when an individual consumes a unit of a good another cannot consume it and that to consume the good it must be paid for. Private goods have similarities to common resources and natural monopolies. Private goods and common resources are both rival; and natural monopolies sell rival products. Public goods have similarities to common resources and natural monopolies as well because they are not excludable. For instance, drinking water that is not bottled is usually something one can obtain without payment. Although natural monopolies are mostly consist of private goods, a natural monopoly like Walmart provides drinking fountains just like community centers (public goods). Nature also provides common resources like a running stream for people to drink water without consumer’s payment.…