...MARKET STRUCTURE IN BANGLADESH QUESTION Question 3 (44 marks) Please note that this question requires substantial research Part A – (8 marks) Explain monopoly and monopolistic competition market structures, and identify the key factors that distinguish them Part B – (18 marks) Choose two different industries from your home country representing monopoly and monopolistic competition market structures. Identify their key characteristics in relation to the factors used to differentiate between the market structures. Using the real 5/5 data from your case studies analyse how well each case study fits with the different market structures. Part C – (6 marks) For the monopoly firm in your case study, identify the potential market power that it has and the types of controls (if any) that are in place to limit this. Part D – (6 marks) For the monopoly firm in your case study, identify if there are other benefits generated by the monopoly that would be difficult to gain from a monopolistic competition market structure. Part E – (6 marks) For the monopolistic competition industry, identify the extent to which firms are able to differentiate their products, and whether this allows them to gain some price advantages. SOLUTION Monopoly and monopolistic competition market structures Monopoly Market Structure The monopoly is understood to be the market structure associated with single seller of a product which has huge demand either as a result of necessity or because...
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...wines (Apollo Group, Inc., 2011). To further her mission and vision, owner Kathy Kudler formed the business within the monopolistic competition market structure, developed a marketing overview, and created market surveys to evaluate the business’s competitiveness in the marketplace. The monopolistic competition market structure includes many firms selling slightly differentiated products. There is an easy entry into the market by new firms in the long run, and the firms are large enough to influence the total supply. There are also multiple dimensions of competition including distribution outlets, advertising, and product attributes (Colander, 2010). The marginal cost will be less than price at its profit-maximizing output level. According to the text, a monopolistic competitor cannot make long-run profit (Colander, 2010). The benefits of the monopolistic competition market structure are the ability to act independently to adapt to changing economic forces and customer tastes to differentiate KFF’s from its competitors. KFF exercises monopolistic behavior through product differentiation and marketing strategies to gain competitive advantage. Additionally, collusion is unlikely to occur because of the difficulty of getting a large number of firms to act as one (Colander, 2010). The challenging characteristics of the monopolistic competition market structure that KFF faces are the few barriers to entry so that many firms are competing in the same market. As a...
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...for themselves. In this busy schedule, the introduction of low calorie microwavable food has lives of people much more easier. These products are easily consumable and hence have become very popular. As discussed in assignment 1, the market structure (or selling environment) was perfectly competitive. In a perfectly competitive market there are a large number of buyers and sellers. The products sold in this market are perfectly homogeneous. Examples of perfect competition are vegetable market, market for cereals etc. In a real world situation, there are many sellers of low calorie microwavable food. If we observe the demand side, we can also find a large number of buyers in the market. With large number of buyers and sellers, if we examine the nature of the product, then we can see that the products are almost homogeneous. The main characteristics of perfect competition are: i. Many buyers and sellers ii. Free entry and exit iii. Information is perfect iv. Homogeneous product Now, firms under perfect competition have no market power and hence cannot affect the market price. They are bound to sell at the ongoing market price. But recently, it has been observed that the characteristics of the market are changing. Since the tastes of people are different, there is a lot of scope for product differentiation in this market. The sellers are also taking the advantage of this taste differentiation and are differentiating their product. Thus the sellers of the microwavable food...
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...You will apply important microeconomics concepts toward the competitive strategies of an organization that operates in an industry of your choice. You will evaluate the differences between market structures and identify a group of competitive strategies consistent with the market structure that best aligns with the market in which the organization competes. You will assess how the market structure positively and negatively affects the firm and evaluate the efficacy of the structure's competitive strategies. Select an industry. Identify an organization in that industry. You may use the company you used for the Week 3 Learning Team assignment or you may select a new organization. Your selected organization must be submitted for instructor approval. Identify the market structure in which this organization competes. Clearly indicate why the market structure was decided upon, and how this market structure differentiates from the other alternatives. * How might the company you selected find itself working with organizations in the same industry that are an oligopoly, perfect competition, monopoly, or monopolistic market structure. Examine the different sectors with an industry and how market structure may vary within those sectors. Identify three or more competitive strategies of your choice that may be used by the organization to maximize its profits over the long run. Evaluate the efficacy of these strategies in the market structure you identified. Make recommendations related...
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... “VTech is the global leader in electronic learning products from infancy to preschool and the world's largest manufacturer of cordless phones” (VTech Corporate Information, 2015). Market Structures There are four different market structures in microeconomics. These structures are perfect competition, monopoly, monopolistic market, and oligopoly. These market structures vary based on the number of firms in the industry, and barriers to entry. Perfect Competition Perfect competition is often used as a reference point in economics, as it is a theoretical structure due to its highly restrictive assumptions. “A perfectly competitive market is a market in which economic forces operate unimpeded” (Colander, 2013, p. 267). To have a perfect competition these conditions must be met: both buyers and sellers are price takers, a large number of firms, no barriers to entry, and the firms’ products are identical. Monopoly In a monopoly, there is only one firm, with huge barriers to entry. “Monopoly is a market structure in which one firm makes up the entire market” (Colander, 2013, p. 287). There is no competition. A monopoly is at the opposite end from perfect competition. Monopolistic Competition Monopolistic competition, or Oligopoly VTech competes in a Identify the market structure in which this organization competes. Clearly indicate why the market structure was decided upon, and how this market structure differentiates from the other alternatives. How might...
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...Market Structure Grace M. Conner ACC 204: Principals of Microeconomics Instructor: Nicholas Bergan June 17, 2013 When consulting for the city of Sherman, Texas with the present mayor, it came to my attention that the mayor needed to understand the different markets within his town. As I went I tried to explain verbally it was discovered the present mayor was not familiar with the different market structures that made up the firms in his town. With this information is where the explaining of the different firms and their markets was explained. There was also discussion on the flow of the market firms and how the price elasticity worked within these firms markets. There was need to describe the high entry barriers that firms face when entering into the market when competing with other more established firms, that have known names against a small proprietors entering this market and the competitions it faces. There was the explaining how the smaller proprietors that do not have a famous or more renown name can hurt them when competing against monopolies and oligopolies, and how these market structures are formed and how they can edge out small proprietors with pricing and products sold that people are more familiar with. The mayor was interested and need to know how the local, state and federal governments could step in and help these smaller firms if there is seen a favoritism towards the higher monopolies...
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...MARKET STRUCTURES Brandi Milostan ECO204: Principles of Microeconomics Professor Mellon July 6, 2015 Welcome Mayor Knowsnothing Congratulations on the start of your new journey Mayor Knowsnothing. I appreciate the opportunity to work with you and get you up to speed on all of the market structures and answer any questions that you may have. I will explain to you the characteristics of each structure and provide you with examples of each from our neighborhood. I’ll help you to understand what pressures they are faced with and how government limitations and international trade might affect them. So, let’s get started on another adventure for you in learning market structures! Let’s Learn the Market Structures There are four different types of market structures. The table below lists the four market structures and each of their characteristics. MARKET STRUCTURE | NUMBER OF FIRMS | TYPE OF PRODUCT | ENTRY INTO INDUSTRY | FIRM'S INFLUENCE OVER PRICE | EXAMPLES | PERFECT COMPETITION | MANY | IDENTICAL | EASY | NONE | AGRICULTURAL CROPS | MONOPOLISTIC COMPETITION | MANY | DIFFERENTIATED | EASY | MODERATE | MANY LOCAL RETAIL OUTLETS | OLIGOPOLY | FEW | EITHER IDENTICAL OR DIFFERENTIATED | DIFFICULT | MODERATE TO SUBSTANTIAL | AUTOMAKERS | MONOPOLY | ONE | UNIQUE | IMPOSSIBLE | SUBSTANTIAL | LOCAL UTILITY | (“Market Structures”, Economics Online Tutor, July 24, 2012) Perfect competition is used as a model for the other market structures to...
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...Introduction Monopolies are known to be the companies that possess an entire market power in their particular industry. When talking about monopolistic companies, we usually reference to a single seller of goods and services in the market. Monopolies have the ability to control prices on their production. This extreme form of imperfect competition in the market has a negative influence on consumer’s choice. In this paper I will discuss the main features of monopolies and its role in the market. Characteristics of a monopoly One of the main characteristics of a monopoly is that it is always one single seller of goods and services in the market. Monopolistic companies do not have any competition which gives them a great advantage of being able to control the prices on their production. The main goal of a monopoly is to make the maximum possible profit by using its price-setting power. Another feature of a monopolistic company is the fact that since there only one firm in the market, there is no possible way for any other company to enter this market. Of course, this perfect monopolistic company does not exist in the modern world. Today we can see very few examples of monopolies. One of them is the famous Microsoft Corporation, one of the largest PC software providers. Microsoft has been dominating in the market for years and used to own a great percentage of this industry’s market. The company made it almost impossible for its competitors to survive, by offering their...
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...Differentiating Between Market Structures Anne Giorno ECO/365 Principles of Microeconomics February 16, 2015 Jong Yi Differentiating Between Market Structures The competitive balance between firms is unique in every industry. Some industries are dominated by a single company, while others have thousands of small businesses competing for market share. The composition of competitive firms is known as the market structure. The grocery industry is an example of monopolistic competition. This type of market structure can have a positive and a negative impact on the structures competitive strategies. Monopolistic Competition Monopolistic competition occurs when there are many different firms competing for market share over similar products. There are generally low barriers to entry, which means it is easy for a small company to become a competitor in the market. All of the companies in this system sell similar products and must make a string effort towards product differentiation. Products and services are considered to have a high elasticity of demand; meaning a 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. A monopoly market is only one single seller. An oligopoly market is dominated by a small number of larger companies selling slightly different...
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...made up of competitive businesses. Some industries have a single company that dominates the entire industry while other industries have many smaller businesses competing in the same market. Each industry has its competition and that balance between the businesses can be unique. Dutch Brothers Coffee is part of the coffee company industry and is an example of monopolistic competition. “Monopolistically competitive markets exhibit the following characteristics: 1. Each firm makes independent decisions about price and output, based on its product, its market, and its costs of production. 2. Knowledge is widely spread between participants, but it is unlikely to be perfect. For example, diners can review all the menus available from restaurants in a town, before they make their choice. Once inside the restaurant, they can view the menu again, before ordering. However, they cannot fully appreciate the restaurant or the meal until after they have dined. 3. The entrepreneur has a more significant role than in firms that are perfectly competitive because of the increased risks associated with decision-making. 4. There is freedom to enter or leave the market, as there are no major barriers to entry or exit. 5. A central feature of monopolistic competition is that products are differentiated. There are four main types of differentiation: 1. Physical product differentiation, where firms use size, design, color, shape, performance, and features to make their products...
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...searching for the best meats, produce, cheeses, and wine” (Apollo, 2013, Strategic Plan, p. 3). Kudler has three stores in Southern California, and the owner Kathy Kudler considers the company as operating in an industry without direct competition (Apollo, 2013, Strategic Plan). This paper will attempt to address Kudler Fine Foods market structures, its competitive strategies, strengths, and weaknesses as well as provide some strategic competitive recommendations. Market Structure The monopolistic competitive market structure according to (Colander, 2010) includes several firms selling slightly different products. Kudler Fine Foods falls within this market structure. There is an easy entry into the market for new firms in the long-run, and these firms are large enough to influence total supply. The benefits of a monopolistic competitive market structure is the ability to act independently, and adapt to economic changes while meeting customer preferences, which differentiates the firm from its competitors. In other words Kudler Fine Foods exercises monopolistic competitive behavior through product differentiation, and marketing strategies to gain the competitive advantage. The challenging characteristics of a monopolistic competitive market structure that organizations face are the few barriers to entry affording many firms the opportunity to compete in the same market. As a result, the company must...
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...The Many Aspects of Market Structures Denise Plumb ECO204 – Principles of Microeconomics Instructor Phelicia Price February 1, 2015 I would first like to thank the mayor for the opportunity to provide the answers to the important questions that will help assist with the understanding of the different market structures of the businesses in the city. Hopefully with a deeper understanding of market structures and how they work, the mayor will be able to provide better insight on what will work best for his/her city. In order for us to understand the relationships between consumers and businesses, we must clearly understand the different characteristics of each market structure; these market structures include Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly. The first market structure that we will discuss is perfect competition. Perfect competition is a theory that is composed of six assumptions that if a market meets all six assumptions, then the market can be considered as a perfectly competitive environment and no individual or company has power to manipulate the market in their favor or increase the price of the item or service. “Perfect competition, neutralizes these strategic behaviors and conflictual interactions, resulting in the elimination of these distributions conflicts…perfect competition (associated with constant returns) dissolves these conflicts of appropriation since every individual can...
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...demand will affect their pricing, will try to maximize their profits. Some firms very little substitutions or have no substitutions, which means that there is very little or no competition, so they can control their pricing. The purpose of the paper is to analyze the market structures to help make you aware of the different categories of market structures within the businesses. “Perfect competition is the market structure in which there are many sellers and buyers, firms produce a homogeneous product, and there is free entry into and exit out of the industry. There are six basic assumptions for the model of perfect competition.” (Amacher & Pate, 2012) Firms in the perfect competition are known as price takers. The products that each firm produces are usually the same, homogeneous. A good example of this is wheat; all products are exactly the same whether you buy it from a farmer next door or from the farmers market. With many sellers in this market, no decisions that a seller makes will affect the price of the product. A firm in this market as many buyers as it does sellers, no one buyer has any market power. It is easy to get entry into and exit out of the market and no one the firms or individual buyers have no influence over price making it perfectly competitive. “In monopolistic competition market structure, the industry consists of a large number of firms, each producing a differentiated product. A very important assumption is that entry into this industry is relatively...
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...Final Paper Name. ECO204: Principles of Microeconomics Professor date Final Paper In 2008, two lawyers began purchasing competitive potato chip firms with the goal to form a monopoly firm called “Wonks”. After purchase of these firms, the two lawyers then hired a management consulting firm to estimate the long-run competitive equilibrium of this new monopoly. The following paper will discuss the benefits of this new monopoly towards stakeholders involved, the changes that may occur in price and output of the product in this particular market structure; and market structure that will most benefit the Wonks potato chip monopoly. A monopoly is defined as a firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry. By purchasing all firms involved with the potato chip industry the two lawyers created a pure monopoly. A pure monopoly would allow the two firm owners to control the whole industry. By seizing control of the market, the firm would now control their position on the market demand curve. They control everything from output quantity, to price point and their only limit to production would be cost of production. When a firm controls there position on the demand curve, the firm has over all power as to what and how much product is produced...
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...to its position on the income statement at the very top. This is to be contrasted with the "bottom line" which denotes net income.[2] The amount of money that a company actually receives during a specific period, including discounts and deductions for returned merchandise. It is the "top line" or "gross income" figure from which costs are subtracted to determine net income. Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold. Revenue is also known as "REVs." Marginal revenue From Wikipedia, the free encyclopedia Jump to: navigation, search Typical marginal revenue R' and average revenue (price) <R> curves for a firm that is not in perfect competition In microeconomics, marginal revenue (R') is the additional revenue that will be generated by increasing product sales by 1 unit.[1][2][3][4][5] It can also be described as the unit revenue the last item sold has generated for the firm.[3][5] In a perfectly competitive market, the additional revenue generated by selling an additional unit of a good is equal to price the firm is able to charge the buyer of the good.[3][6] This is because a firm in a competitive market will always get the...
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