ECO 561 Week 3 Learning Team Deliverable
Learning Team Deliverable
As future business managers or entrepreneurs, the classification and types of marketstructure, upsurge the team’s interest. Thus, this week’s team deliverable focuses on pure monopoly, monopolistic competitive markets, oligopoly, and pure competition. In economics, market structure refers to the number of firms producing identical products or services.
In a pure monopoly there is only one! The team pinpointed some key terms that helped us differentiate this type of market from the other three structures. A“single seller” monopoly is one where a single firm is the sole producer of a good or service. A “no close substitutes” is a company that sales a product and there is nothing in the market the can be used as a substitute, therefore everyone have only one place to go to buy the produce. The “price maker” is when a firm has control over the quantity supplied; consequently they will have control over the price of the product they are producing. The “blocked entry” limits competitors from entering a market due to certain barriers such as economic or legal, things such as patents or licenses (McConnell, Brue & Flynn, 2009).A monopoly exists when there is only one supplier of a good, with no close substitutes; the smaller the number of firm in this industry, and the larger those firms are, the more power that exists in that industry around control and prices. As a result, the greater the market share the more power the firm will have over the industry.Today, a few examples of monopolies are Microsoft, Wal-Mart, and the United States Postal Service (Simpson, 2010).
A monopolistic competitive market represents imperfect competition because the producers sell products through differentiation, so there is little room for substitutes. These markets are relatively easy to enter and exit, has various sellers and buyers. The organizations in this market spend quite a bit of money on advertising to emphasize the attributes that make their product different from the rest and entice consumers to select their product over all the others. The advertising strategies may focus on a number of aspects such as design, branding, packaging, service, and location. By fixating on things like branding or quality, they eliminate price or set it at the competitors. Monopolistic competition is present when the four largest firms in an industry produces less than 40% of its total output. The firms have little control over price because each company may hold a small share of the market (McConnell, Brue & Flynn, 2009).Retail bakeries, ready mix concrete, wood pallets, and stone products are a few examples of products in a monopolistic competitive market. This market is beneficial to consumers because it gives them a choice to select the product that best meet their individual needs.