Market Structure Essay

1677 words - 7 pages

There is a range of different market structures that exist in an economic system. The main characteristics of each market vary depending on the industry and the companies related to that industry. Under a mixed economy, it is important for a business to understand what sort of market structure it operates in, as customers are able to choose among a wide range of products, directly affecting price, demand and supply levels. The main different types of market are known as perfect competition, monopolistic competition, oligopoly and monopoly.
This is a very important market structure, where there are a large number of firms, all of them fairly small compared to the size of ...view middle of the document...

Some of theses factors may ruin the crops and decrease productivity, being out of the control of the farmer, for example, the weather and pests. Although farmers can control pests by using chemical treatments, it can alter the ratio of inputs and outputs. Besides, farmers are still likely to face drought, long-lasting rainy season or unexpected frosts.
The influence of these factors might be good or bad, depending on the farmer’s circumstances. For example, the capacity of a soil is important, and some productions can be forced through the use of fertilizers, enabling the production to go beyond capacity. However, the use of fertilizers, when not controlled accurately, can change the quality of the soil and the product. The availability of equipments is also a factor influenced by circumstances. If the farmer has easy access to technology as well as budget to invest in time, energy and money, it can improve the productivity. Likewise, those without easy access to technology are in disadvantage, as they handle their crops primarily by hand.
The monopolistic competition is a market structure with a reasonable number of producers and consumers, whereas producers offer a very much similar product, somehow differentiated – or perceived to differ, therefore with different prices. However, no firm has total control over prices in this kind of market structure and the barriers to entry or leave the industry are also low. Monopolistic competition is similar to perfect competition but some economist regard it as perhaps more realistic, because the products are differentiated (or ‘non-homogeneous’). (Tutor2U)
If you walk into a high street, you can see an extensive number of businesses fitted in a monopolistic competition structure. For example, the retail sector, whereas one store sells pretty much the same commodity as another store and retailers try to somehow differentiate their products through its nature (e.g. design, quality) in order to obtain some control over prices. So monopolistic competition leads to strong brand loyalty, whenever the company decides to raise its prices, it might lose some customers, whilst those who particularly like the brand would remain.
The levels of price, supply and demand in a monopolistic competition can be affected by a number of factors. One of the strongest is the fact that consumer preferences change in accordance with its culture, lifestyle and norms, affecting the retail market in different ways. Technological factors also influence on price, supply and demand levels in monopolistic competition. It includes the availability of resources, demand and production. Let’s imagine there’s a scarcity of rubber, which is used for shoe soles, therefore, forcing producers to look for an alternative material, such as wood.
Economic factors can affect the market both negatively and positively. It means that, during a recession period, people might not purchase goods and services as much as...

Find Another Essay On Market Structure

Market Structure and Analysis

1113 words - 5 pages There are a few different market structures, competitive market, monopolies, and oligopolies. According to Mankiw (2007) competitive market, also known as monopolistic competition or “perfectly competitive market” is defined as “a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker” (Pg. 290). In this market structure there are two characteristics: there are many buyers and many sellers

Market Structure Simulation Essay

1038 words - 4 pages Division of East-West Transportation Inc operates as a perfect competitive market. A perfect competitive market structure has "a large number of buyers and sellers" (Colander, 2004). With this type of market structure, no company controls the market price. The CEO develops the market price to determine the output of production to maximize profits. The CEO, implements the output where MR equals MC. Therefore, the profit maximizes at a point where P

Market Structure simulation

643 words - 3 pages different market structures, have experienced some losses and others have experienced profits within the same period of time.The Consumer Goods division operates within a Perfect Competition market structure. The division has recently experienced some losses in profit. The issue is that there are far too many competitors offering the same service, and there is no control over prices. A decision had to be made in order to reduce the amount of

Netflix Market Structure

1686 words - 7 pages than 40 countries in the North America, Europe, and the Latin America (Netflix, 2014). In this analysis, the main focus is examining the current market environment for Netflix. It identifies the type of market structure that Netflix is currently competing. The analysis also expands on the competitions, product differentiation, pricing strategy, and measuring the level of easy entry-and-exit. II. Market Structure Market structure breakdowns

East-West Transportation Inc Market Structure Simulation

1207 words - 5 pages Market Structure PAGE 1 East-West Transportation Inc Market Structure SimulationUniversity of Phoenix OnlineDecember 1, 2008East-West Transportation Inc Market Structure SimulationThe simulation offered by the University of Phoenix in conjunction with the Principles of Microeconomics focuses on real life situations in market structures of firms. The scenario creates a distinction of market structures within a single corporation. The East-West

market structure change in music recording industry

740 words - 3 pages To consider the market structure in the traditional music recording industry, oligopoly models are the applicable focus, since a small handful of firms – The Big Four currently dominates the whole industry. However, independent firms with relatively smaller scale often initiated new products, which attracted consumers. According to Peter Alexander, “the distribution of market share among major and independent firms in the domestic music

Choice of Product and the Market Structure

1847 words - 8 pages Choice of product and the market structure My choice of product is automobile/Car and the company is Ford. Traditionally, the American automotive industry has been an oligopoly market. By the end of 1920s, it was dominated by three big companies- Ford, General Motors, and Chrysler. This dominance by three big companies remained even after post-world war II period. These companies hold the largest share of automobile market. The three major

Crude Oil Market Structure changing scenario

9672 words - 39 pages Oil market structure, network effects and the choice of currenty for oil invoicing OCCAS IONAL PAPER SER IES NO 77 / DECEMBER 2007 OIL MARKET STRUCTURE, NETWORK EFFECTS AND THE CHOICE OF CURRENCY FOR OIL INVOICING by Elitza Mileva and Nikolaus Siegfried Date: 05 12, 2007 16:06:26;Format: (420.00 x 297.00

What is the structure of the world oil market?

1916 words - 8 pages The oil industry is a large and fast depleting industry. The main market oil producing countries and organizations such as Opec and Opec+, and a few other non-Opec countries indicate that their current production rates (reserves) are slowly being eaten up. This is shown by (graph 1)The structure of the world oil market is set to be oligopolistic as the oil market is dominated buy few suppliers, such as Opec and Opec + and the North Sea. For a

Clear Hear Revenue, Cost Concepts, and Market Structure Proposal

940 words - 4 pages Clear Hear Revenue, Cost Concepts PAGE 1 Clear Hear Revenue, Cost Concepts, and Market Structure ProposalUniversity of PhoenixClear Hear Revenue, Cost Concepts, and Market Structure ProposalClear Hear, a manufacturer of cell phones, is always looking to increase its revenue, maximize its production operation while adhering to its corporate core values which are to keep its employees working, provide customers with products on-time, reliability

What are the incentives to innovate? Which market structure creates the best conditions for innovation?

982 words - 4 pages Untitled What are the incentives to innovate? Which market structure creates the best conditions for innovation? Foreword What is the key to the answer on topic questions? To my mind this is the potential of the company to receive profits and degree of competition on the market. In reality the research and development (R&D) activity is not cheap. Sure, there are a lot of examples when ordinary people made important

Similar Essays

Market Structure Essay

1321 words - 6 pages The concept of market structure is many interconnected relationships. The relationships consist of the buyers and sellers and how they are positioned in the market. Structures place them according to market strength; show their product differentiations, and how easy they can move within the given market. Market structure is dependent upon the number of firms offering a particular product or service, in addition to what that product or service

Market Structure Essay

960 words - 4 pages Untitled Week 4 - Market Structure Simulation ECO 365 - Principles of Microeconomics March 8, 2010 University of Phoenix Market Structure Simulation The simulation positioned users of the software as a CEO of East-West Transportation a freight transportation company. The simulation took users through each division of the company, that if which being Consumer Goods

Market Structure Essay

824 words - 3 pages Market structure is defined as the particular environment of a firm, the characteristics of which influence the firm’s pricing and output decisions. There are four theories of market structure. These theories are:                •     Pure competition                •&nbsp

Market Structure Essay

2392 words - 10 pages It is very important to follow a theory to develop a market structure as each product requires a different market structure. It is not possible to ignore the theory and follow intuitions. Many theories subsist today for market development and it solves a great number of problems faced by the managers. The major marketing problem is often the level of competition rather than difficulties with getting the product into the country, as is often the