Differentiating Between Market Structures
Lydia Moore
ECO 365
Eugene Gotwalt
May 11, 2015

Differentiating Between Market Structures
The competitive balance between forms is unique in every industry. A single company, while others, dominates some industries, have thousands of small companies competing for the market share. The composition of competitive forms is known as the market structure. For the purpose of this essay, I will focus on a firm called, Safeway Incorporated. This company works in the grocery industry, which would be an example of monopolistic competition. An analysis of the market structure wil be described and competitive strategies’ will be recommended for the company. Implementing these strategies will help this company in being successful in the market structure.
Defining Monopolistic Competition
Monopolistic competition occurs when there are many different firms competing for market share of similar products. These are generally low barriers. Which means that it is relatively easy for small companies to become a competitor in the market. All of the companies in this system sell similar products and must make a strong effort towards product differentiation. Products and services are considered to have a high elasticity of demand; meaning consumer has many comparable alternatives to choose from.
If a firm decides to raise prices, a consumer in a monopolistic competition market should find it easy to find a similar alternative in their local area (Corcelli 2006). This differs from monopolies and oligopolies, which only have a small number of competitors. These market structures still perform product differentiation, but they rarely compete on prices. It is also different from perfect competition, because it lacks a high level of efficiency.

The grocery industry is a good example of monopolistic competition because consumers often