Understanding Market Structures Essay - 2656 Words

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†¦show more content†¦For example a dairy farm, if the owner chooses that they want to sell or not then it does not affect the price because there are so many other dairy farmers, the price will not be affected. The next characteristic that I wi ll discuss will be there is a large number of buyers, as above it is in the same category but flipped, there is no single buyer that has market power meaning that one person is not going to affect the price of the product. The next market structure that I will discuss will be monopolistic competition. According to our text it is â€Å"In monopolistic competition the industry consists of a large number of firms, each producing a differentiated product.† (Amacher and Pate 2013, Chapter 11 section 3) What this means is this is considered an imperfect competition because the sellers will produce products that are close to or similar to a well-known product. The characteristics of monopolistic competition are a large number of firms, firms that are new can enter into the industry and begin selling their idea of a large name brand (generics). A good example of this would be a name brand product such as Gain laundry detergent, and it is cheaper competitor would be the stores version of the same product, it may appear to be similar but may miss some of the smells intensity and so on. There are many products that try to â€Å"mirror† their name brand successors, from foodShow MoreRelatedRef lection Paper1607 Words   |  7 Pageslearning team began discussing the topic of market structures. According to our readings, there are four different types of market structures such as pure competition, a pure monopoly, a monopolistic competition, and an oligopoly. Each one of these market structures are diverse in definition, characteristics, and in application, which will be further explained later in detail. We had learned that each one of these four market structures can be applied to businesses, organizationsRead MorePerfect Competition : A Market Structure1942 Words   |  8 PagesWhen trying to top look for a market structure to fit your needs a person should start with perfect completion, monopolistic competition, oligopoly, and monopoly. These four market structure are used by business to aid the businesses in producing and selling products. Perfect competition is described as a market structure that has many sellers and buyers that produce the same product and they are allowed to leave and exit the industry at any time. Free entry and free exit is a crucial characteristicRead MoreThe Level Of Concentration Is High1314 Words   |  6 PagesWith my research I found that the level of concentration is high enough to suggest that some markets within the construction industry can be considered oligopolistic. 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AlthoughRead MoreMonopolies, Oligopoly, Monopolistic Competition, And Perfect Competition1085 Words   |  5 PagesMonopolies When understanding the different types f structures it is important to know the different types of markets that there are. Understanding barriers, buyers and sellers with knowing the market share and competition is important to understand what barriers are occurring in the market. The different market structures are Monopoly, Oligopoly, Monopolistic Competition, and Perfect Competition. 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