...This paper will explain why there is a need for competition in the markets and how the European Commission wants to safeguard and create conditions that function competitively. Imagine a market where there is only one major supplier and a lot of demand for the product he is supplying. For example there is only one big supplier of gas and the whole world has a need for this gas. Then the consumers do not have any power and the supplier has it all. In this particular situation the monopolist is no longer going to create innovative products (e. g. better fuel) and furthermore the prices will increase, because he can set the prices. The monopolist will no longer be interested in being competitive rather than in maximizing his profit due to minimizing the costs at which he is producing, resulting in a lack of quality. You can also observe that the total quantity of gas sold will be less than in a competitive environment, which is contra productive for the consumers. In an environment where there are lots of suppliers all of the above mentioned problems will not occur due to the competition. That is why the European Commission has a high interest in ensuring that there are competitive market situations everywhere. They want to create these conditions in punishing companies or states that are trying to create non-competitive market situations such as price-fixing cartels, market-share cartels or state-aid to specific companies. Their 3 major instruments are the antitrust, the...
Words: 495 - Pages: 2
...Assignment #2 – Market Structure: Monopoly and Monopolistic Competition ECO550: Economics for Managers Assignment 2 Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is contracted out to office maintenance firms, and both technology and labor requirements are very basic. Supply and demand conditions in this perfectly competitive service market in New York are: |QS = 2P - 20 |(Supply) | | | | |QD = 80 - 2P |(Demand) | where Q is thousands of hours of floor reconditioning per month, and P is the price per hour. |A. |Algebraically determine the market equilibrium price/output combination. | When calculating for equilibrium, QS = QD 2P – 20 = 80 – 2P 4P = 100 P = 25 When substituting the value of P in the equation for supply and demand, we calculate the value of Q as QS = 2P – 20 QS = 2*25 – 20 QS = 30 Equating both supply and demand and solving it for Q 2p+2p=80+20 4p = 100 P = $25 Q = 30 (thousands of hours) |B. |Use a graph to confirm your answer. | ...
Words: 360 - Pages: 2
...Consider Singapore retail firms (retailers) and discuss if oligopoly or monopolistic competition best explains these retailers’ market behaviour. Does oligopoly or monopolistic competition better explain the market behaviour of Singapore retail firms? First, a few definitions are in order. First, retailers are firms that do not produce their goods that are sold, but only sell goods which are in turn manufactured by manufacturers or producers. Second, oligopoly is characterised by many buyers but few sellers, each of the sellers interacting strategically against their rivals, which are the other firms competing in the oligopolistic industry, and there are high barriers to entry, usually caused by high economies of scale. Third, monopolistic competition is a market structure where there are many buyers and sellers, few barriers to entry, and differentiated products that are quite different from other competitors, but psychologically or physically different. For example, NTUC and Giant hypermarket are examples of oligopoly while clothing retail shops such as Charles and Keith are examples of monopolistic competition. First, monopolistic competitive firms can make independent decisions on pricing and output, whereas oligopolies are mutually interdependent because they are rivals rather than competitors. There is price stickiness in oligopoly, shown by the oligopoly kinked demand curve model, which shows there is no incentive for firms to raise or lower prices as long...
Words: 612 - Pages: 3
...Examining the Laws on Commercial Speech and Free Market Competition Our society has advanced to where it is today because of the interaction and exchange that fosters innovation and economic progress. We cannot naively rely on the pure goodness of society to insure that trade and business is fair—society depends on institutions for that, more specifically the institution of law. Good laws are intended for society to capture the gains from trade and interaction. This paper will evaluate whether the laws that relate to commercial speech and free market competition are designed with society in the forethought. Commercial speech is speech delivered by a business or someone speaking on behalf of a business to potential consumers. The first amendment in the United States Constitution protects the freedom of speech, but whether it also protects commercial speech has been subject to debate in the past. A case that tackles this issue is Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council. Consumers in Virginia challenged a statute that prohibited licensed pharmacists from disclosing price information on prescription drugs, deeming that to be unprofessional conduct. What makes this case unique is that the ones who brought forth the suit are not the subject of the statute, the pharmacists, but the consumers. The consumers believe that the poor, sick, and elderly are hit the hardest by this statute because “a disproportionate amount of their income tends to be spent...
Words: 1554 - Pages: 7
...ANALYSIS OF MARKET COMPETITION, SWITCHING COSTS AND ITS CONSEQUENCES IN TELECOMMUNICATIONS IN NEPAL NAME: SAROJ POUDEL DEGREE: MASTER OF INFORMATION SYSTEMS/MASTER OF INFORMATION TECHNOLOGY COURSE: 7112ICT RESEARCH METHODS IN INFORMATION TECHNOLOGY INTRODUCTION The economics of switching costs and network effects have achieved a significant amount of popular, as well as professional attention in the last few decades. It is presently defined as the core factor for new Information Technology economy. Switching costs originates, if a consumer demands a product, or its related accessories(hardware or software), of his own purchases to be compatible with each other this creates economies of scope among his purchases from a single supplier. Whereas network effects arise when a user wants his system to be compatible so that s/he can interact or trade with other users, or switch to the same compatible system, which leads to the creation of economies of scope between different incompatible products. Thus these economies of scope impacts the consumer’s buying and switching behavior between various products. The state of lock-in arises when the switching cost is sufficiently high so that the consumer proceeds using the same product rather than switching to the different product. Lock in is the state where the cost of switching exceeds the benefits of switching. Economics of switching costs is the summation of various types of switching costs including: compatibility...
Words: 3447 - Pages: 14
...1. Competitions in the international hotel industry is increasingly intensified and globalized as hotels seek new ways to grow and target markets and potential customers have more alternative to choose from. Explain in detail this issue. Over the past two generations, the hotel industry has evolved in a continued boom to accommodate explosive growth and radically changing consumer demand, and has adjusted itself to a substantially different social and economic environment. Consequently, more complicated and varied types of hotels have been brought into existence. Simultaneously, the competition to secure a strong share in the global hotel market has become fierce among hotel chains armed with a wide variety of worldwide networks. Hospitality companies can be grouped as either limited-service organizations or service intensive operations. In the hotel industry, polarization in hotel is being accelerated. The most basic division is between limited- service and full-service properties, hotels are tailoring themselves to specialized markets, a practice often referred to as target marketing. One of the major reasons hotels are increasingly targeting specific market segments is that in most markets, there is more than enough hotel capacity to go around. Competition will be even tougher in the years ahead. Hotels offer a highly competitive outlook for all but the luxury sector. The growth in competition makes tightly controlled operations especially important to survival. Hotel companies...
Words: 539 - Pages: 3
...Four Market Structures Shavon Harrison ECON222 Kunsoo Choi What are the four market structures and their characteristics? According to McConnell and Brue (2004) describe four market structures that companies align themselves with during the course of their corporate lives.: “Pure Competition, Pure Monopoly, Monopolistic Competition and Oligopoly. Companies may move from market structure to market structure over the course of growth and time. This movement between structures may be the result of product changes, introduction of competition or consumer interests. McConnell and Brue (2004) also states that, pure competition is "a very large number of firms producing a standardized product". This is the case with the corn industry. One example of a pure competition corporation is "Farmers Cooperative Association" (FCA). A Farmers' Cooperative Association is a group of farmers, at their convenience, who come together to form a co-op in order to: improve bargaining power; reduce costs; obtain market access or broaden market opportunities and improve product or service quality (Nebraska Department of Agriculture, n.d.) that would normally not be achieved as an individual farmer. In doing so each farmer pays a fee to the Cooperation. The Cooperation itself is normally a non-profit organization in that the profit is attained back to the members supplying the product. Pricing is determined by the Board of Trade and is typically nonnegotiable. Cooperatives can hold corn at the request...
Words: 1249 - Pages: 5
...(FDX) in their current industry market. Competition will be assessed to create an understanding of the current landscape of the industry from the perspective of traditional, potential, and oblique competitors in FDX’s current industry. FDX will then be analyzed utilizing the SWOT model that will be utilized to identify three strategic options in the current market that will foster corporate growth in the future. Once identified, each strategic option will be evaluated via three criteria based on three simple questions as follows: Is it big? Is it us? Is it time? After this evaluation is complete there will be one strategic option selected that best meets the selection criteria in totality. FedEx Corporation: The Competition Competition in the transportation market is intense both domestically and globally and is the heart of every organizations strategy within this industry. Freight and courier services are at a high demand throughout the world due to growing distribution channels, technology, and a marked increase in demand. Market volume and value are projected to achieve growth of over thirty three percent by 2017 and will further raise the level of competition, rivalry, and fragmentation in this industry (Marketline, 2013, p. 27). FDX, an industry leader, maintains a pointed focus in providing comprehensive services within this growing industry and faces competition from many sources that are traditional...
Words: 1987 - Pages: 8
... MKT/421 Blue Ocean Strategy The blue ocean strategy in marketing is a original tactic to establishing a consumer base. Instead of competing in a congested marketplace with prevailing establishments, a blue ocean strategy aims to form an original market segment that has no other present companies, or, in other words, finds or is able to create a target market with no competition at all. Since technology and globalization is ever changing or ever evolving, the significance of a blue ocean scheme has strengthened in the last recent years. Below, the thorough passage analyzes the blue ocean strategy and suggests recommendations to employ the tactic in the modern business environment. Companies depend on market researchers to consider the four Ps of marketing when developing a new product. The four Ps consist of product, placement, price and promotion. To compete with competition successfully, it is crucial to provide potential customers a certain value to stand out from the competition. For instance, a company can proposition a product at a lesser price or at a superior quality then that of a present competitor in the market. However, it is possible that a competitor can be unavoidable or undefeatable in any given market; moreover, the antidote for the situation previously stated is the blue ocean strategy. Blue ocean strategies have worked in real-world business situations, exceptionally in the technology industry. For example, Samsung released the Galaxy smartphones...
Words: 696 - Pages: 3
...House of Kebab Contents 1 Introduction 2 1.1 Company Summary 2 1.2 Company Ownership 3 2 Five Forces Model and Analysis 4 2.1 Barriers To Entry 5 2.2 Supplier Power 8 2.3 Buyer Power 10 2.4 Threat of Substitutes 11 2.4.1 The Threat of Substitutes are High 11 2.5 Rivalry among Existing Firms 12 3 Conclusion 17 INTRODUCTION House of Kebab is a locally owned fast food outlet that will be positioned as an international franchise through our creative approach to the company's image and detail presentation. House of Kebab will provide a combination of excellent food at value pricing, with fun packaging and atmosphere. House of Kebab is the answer to an increasing demand for kebab and shawarma fast food. In today's highly competitive environment, it is becoming increasingly difficult to differentiate one fast food outlet from another. Our main priority is to establish one outlet in Kuala Lumpur, preferably in one of prominent housing estate. Later, our effort will be a further development of more retail outlets in the surrounding area. House of Kebab will entice youngsters to bring their friends and family with our innovative environment and our main focus will be serving high-quality food at a great value. COMPANY SUMMARY House of kebab sells specially made shawarma sandwich-like wrap usually composed of shaved lamb, goat, chicken, turkey, beef, or a mixture of meats and kebab which consist of thin slices cut from a cylindrical block of minced...
Words: 4548 - Pages: 19
...and development in order to produce cutting edge technology that will differentiate their brand within the footwear market. The footwear industry is a mature market with many international competitors. In Europe, the footwear is dominated by many small & medium enterprises, which gives firms more flexibility to cater to specific consumer needs. The basic drivers for consumers buying decisions include demography, disposable income, basic needs, style and new materials. Fashion trends have a major influence on the footwear industry as well as new technology. The industry is very labor intensive and most companies follow a delocalization manufacturing strategy to capture lower labor costs. The primary market segments include Sport/Athletic, Work and Brown. Geox competes mostly in the Brown market but acts as a competitor in the Athletic market because of their focus on technology. Competition is harsher in the Sport/Athletic market as it is the largest market in the footwear industry. Geox should continue to exploit new market opportunities embedded in technological innovation and should focus on allocating their resources to maximize returns. They should continue to search for ways for knowledge spill-over as it has lead to positive effects and complementary activities. Geox needs to effectively communicate its brand and innovation by creating uncontested market space and a niche within the...
Words: 2185 - Pages: 9
...without the internet. Now why has the development of the internet become an important economic phenomenon? To answer this question, I feel it is best to take a look into the past, before the age of the internet. If I was to try and explain our reality of the internet in today's world, to the average someone of just twenty five years ago, they would have most likely thought this was a story out of a science fiction novel. The possibilities of the internet are limitless. It has become a priceless tool in the markets today and it is something that continues to evolve the way we live, interact, and conduct business with others on a daily basis. The internet has increased productivity and efficiency to levels thought impossible not long ago. The internet affects every person in the world, whether they realize it or not. I am here to explain how this development of the internet is an economic phenomenon and how it has changed product markets in yesterdays world to product markets in today's world. Why has the internet become an economic phenomenon? To answer this question I feel you need to look at the world before the internet and how the world of economics was conducted during those times. Before the internet, Businesses were limited to the number of people they could advertise their product to. This limited...
Words: 1104 - Pages: 5
...marketplace and maintain competition, prevent anticompetitive mergers and other anticompetitive business practices in the marketplace. When companies merge or one buys another, the Federal Trade Commission always takes a look to make sure everything is on the up and up. The Federal Trade Commission looked into the merger between Verizon and Alltel to make sure that it did not pose an unfair advantage to others in the telecommunications market. Back in 2012 the Federal Trade Commission open an investigation into Google for antitrust violations. The Federal Trade Commission’s focus is whether Google manipulates search results to favor its own products, and makes it harder for competitors and their products to appear on a results page. It was alleged that Google used its market share to prevent ads of competitors from showing on Google. The Google case was the largest of its kind since the one against Microsoft. The investigation lasted 20 months and ended with the Federal Trade Commission coming to the conclusion that Google did not violate any antitrust laws. No fines were levied against Google, but Google did voluntarily change some of the ways they do business to prevent a future antitrust lawsuit. If Google practiced business in this way I would pose and unfair advantage for their competitors. People using their site to search would not be able to see ads of competitors, which would violate antitrust laws. This would be a way for Google to monopolize the market with their products...
Words: 905 - Pages: 4
...that use their out of the box thinking to achieve an objective or goal which allows its business a chance to compete in its specific industry (Sooperturtorials.com, 2009). Porter’s five forces model of competitive analysis is very popular and widely used for developing many ideas and strategies across many industries. The intensity of competition varies across industry. The intensity of competition is likely to be higher in low return industries as compared to high return industries due to the fewer requirements of capital and common products that require minimum R & D and efforts for production. In the category of business technology involving personal and business, computers have become a commodity and Dell Computer Corporation has evolved with the growing market. The competition is fierce in this sector and margins can be low. The lower end computers with high-speed internet capabilities have become the main selling force. As dial up internet continually proceeds to fade away and the consumers’ needs to upgrade their computers grow, the need to satisfy the consumers demand for high-speed internet will increase as well. Competition in peripherals is also very intense. New peripheral entrants will drive the margin down even further and create more competitiveness in the industry. In the mind of Porter, the ideal nature of competitiveness in a...
Words: 1285 - Pages: 6
...COMPETITION With regards to securing sales for the aquatred tires in the passenger car replacement market, Goodyear faced a few competitors in the same market. Their competitors could essentially fit into two distinct categories: Primary (manufacturer-level) and Secondary (retail-level) Competitors. Primary Competitors Goodyear’s primary competitors are other tire manufacturing companies, both foreign and domestic, such as Michelin, Firestone, Bridgestone, etc. (Also, “private label” tire manufacturers fit in this category?) The industry had, in the last year, experienced many acquisitions or takeovers of smaller tire companies by dominant firms with a bigger market share. The disappearance of the smaller players was indicative of a mature market, thick with price competition, yielding economic conditions that have almost completely annihilated profit margins for all players. At the same time, consumers were becoming savvy about the need for reliability and longevity in their replacement tires, which made it critical for surviving companies to adhere to the new demands. Of all the competing tire companies, Michelin and Bridgestone, in particular, posed the biggest competition to not only Goodyear as a company, but the aquatred as a superior tire. The major key points are that: i. Michelin and Bridgestone were planning to introduce a new tire in the next two years with an improved warranty of 80,000 miles. This was as a result of increasing demand for longer-wearing...
Words: 488 - Pages: 2
