...3.0 Introduction to Monopolistic & Oligopoly Competition In today’s business context, firms facing numerous challengers when considering enter into different market segments. Monopolistic competition is a market structure where varieties of firms compete in a marketplace by providing differentiated products (Kumar and Chatterjee, 2015). Besides, an oligopoly competition involved the domination of a few firms in the market where producers offer homogeneous or differentiated product to a large number of consumers (Wen and David, 2001). 3.1 Characteristic of Monopolistic Competition Monopolistic competition is characterized by many sellers in the market; involving numerous independent firms competing in the market lead to a high degree of competition. On the other hand,...
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...Applications Reference Books Sr No R-1 R-2 R-3 Other Reading Sr No OR-1 OR-2 OR-3 OR-4 OR-5 OR-6 OR-7 Journals articles as Compulsary reading (specific articles, complete reference) Kwang Ng,Yew,Why Is a Financial Crisis Important? The Significance of the Relaxation of the Assumption of Perfect Competition,International Journal of Business and Economics,2009,Vol.8,No.2,91-114 , Roman Indrest and Tommasso Valletti,Price Discrimination in input markets,The Rand Journal of Economics,Vol. 40,No.1,Spring 2009,1-19 , Cordtz,Dan,Car wars: A global report on Auto Industry,FInancial World,August 22,1989;158,17;ABI/INFORM Global , S.k.Mishra,A Brief History of Production Functions,The IUP Journal of Managerial Economics,November,2010,Vol. VIII,No. 4,pp.6-34 , Monika Jain,Paradox of Plenty,with Special Reference to Inelastic Demand for Apples,The IUP Journal of Managerial Economics,May,2011,Vol. IX,No. 2,pp.4455 , Cathy Locke Bee Staff Writer. The Sacramento Bee ,"EID report reveals household water use on rise An analysis of supply, demand recommends holding off on meters" http://search.proquest.com/docview/246565304?accountid=80692 , Yeung; Vincent Mok,Regional monopoly and interregional and intraregional competition :The parallel trade in coca cola between shanghai and Hangzhou in China,Economic Geography; Jan 2006; 82, 1; ABI/INFORM Global,pp.89-109 , Title Managerial Economics Author Damodaran, Suma Edition 1st 1st 1st Year 2010 2009 2011 Publisher Name Oxford University Press Cengage Learning...
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...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 of the huge customer base (Gillespie,2011). However this may not be correct that in case of monopoly there is single seller. But...
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...Abstract There are four basic model markets, perfect competition, monopoly monopolistic competition, and oligopoly. This paper analyzes the monopolistic competition model through a case study which is the toothpaste market. This industry represents a clear example of monopolistic competition, and its analysis is used to explain the key characteristics of this market as well as the two main firms that compete in this market in the United Stated. These firms are Procter and Gamble and Colgate Palmolive which represent the majority of the market share in the United States. Finally, it is found that innovation is a key factor in monopolistic competition because it represents the ability to differentiate products and attract more consumers. The main conclusion drawn from this paper is that the monopolistic competition is the most common model in the United States and the technology and innovation advances have allowed organizations to reach these types of markets and maximize profits. Venezuela vs. United States Economy Have you ever though why some countries are richer than others? Or what there is inequality among countries? All those answers are related to the economy of a country and their macroeconomic indicators. Today, macroeconomic is a crucial concept that we can see every day in the news; employment, inflation, and growth are some of those economy indicators. (1) But it is not so easy to say why a country is richer than other; or why the economy of a country...
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...Tutorials ] Course No. ECO111 Course Title: MICRO ECONOMICS L: 4 T: 1 P: 0 Cr: 5 Course Planner :- 13612 :: Chander Shekhar Dogra TextBook 1. Geetika, Ghosh Piyali, Purba Roy Choudhury, Managerial Economics, Tata McGraw Hill, New Delhi, 2008 Other Specific Books 2. 3. 4. Other Readings Ahuja, H.L,”Modern Microeconomics Theory and Applications,” Sultan Chand, 2008 Misra and Puri, Economic Environment of Business, 4th Edition, 2007. Samuelson, P.A. and W.D. Nordhaus (1998), Economics, Tata McGraw Hill, New Delhi 2008 Dominick Salvatore, Managerial Economics, Oxford University Press, Sixth Edition Sr. No. Jouranls atricles as compulsary readings (specific articles, Complete reference) 5 6 7 8 Competition and the cartel crusade, Alan Moran. Review - Institute of Public Affairs. Melbourne:Jan 2008. Vol. 59, Iss. 4, p. 57-59 Supply and Demand Irena Asmundson. Finance & Development. Washington:Jun 2010. Vol. 47, Iss. 2, p. 48-49 Impact of Anti dumping measures on Indian Industry by Swati Jain, Sudhir K. Jain, Decision, Vol 35, No 1, January-June, 2008, p 3. The New Global Opportunity by Michael Elliot, Fortune, July 5, 2010, Vol 162, No 1, Relevant Websites Sr. No. Web adress (only if relevant to the courses) Salient Features 9 10 11 www.ecommerce-guide.com www.bloomberg.co.uk www.mit.edu Excellent source of reference for market research Excellent data on crrent market, economic, industrial and financial trends as a...
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...Table of Contents 1.0 Article Summary 2 2.0 Application and Illustration 2 2.1 Concept 1 - Market Equilibrium 2 2.1.1 Analyze the concept 2 2.1.2 Illustrate the Issue 3 2.2 Concept 2 - Consumer surplus and producer surplus 4 2.2.1 Analyze the concept 4 2.2.2 Illustrate the Issue 4 2.3 Concept 3 - Monopolistic Competition 5 2.3.1 Analyze the concept 5 2.3.2 Illustrate the Issue 7 3.0 References 8 1.0 Article Summary Based on the article, the car prices in Malaysia will face an increase in 2016, plus the gloomy monetary standpoint with the ringgit hitting its most minimal worth against the US dollar since the last 17 years ago currency crisis, a few individuals may need to delay their plan for buying a new car. After implementation of the Goods and Services Tax (GST), the car area has been hit by moderate interest from customers. Presently with the spiraling ringgit, the industry is in an extreme position keeping costs low to get deals against the increasing expense of parts, imported from abroad. Industry players proposed that those wanting to purchase cars, whether new or pre-owned, to do as such before the cost increment get to be inescapable because of the cash devaluation. In this circumstance, the business sector is still steady until further notice, however applying for advances will be more troublesome soon. In the event that the cars dealing develop quickly, it implies the economy is great, yet now even houses are not offering admirably...
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...that a minimum wage causes unemployment as a myth. The Department argues that an analysis of 64 studies on minimum wage rises found no apparent effect on employment. In addition, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in help of increasing the minimum wage to $10.10 in the next two years. In 1994, Card and Krueger suggested that minimum wages may not necessarily decrease employment, but can actually increase it. It is hard to believe that a price floor may lead to an increase in quantity of labour employed in competitive labour markets. However, it is not so hard to believe, when discussion comes to oligopsony and monopolistic competition labour markets, where multiple...
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...accounts, a majority of so-called private and public utilities including software, transportation, natural resources such as petrol and financial institutions among some small-scale patent firms have been granted governmental franchise monopolies in recent years. Holding such a dominant position in a market, this legal right, Monopoly - as distinguished from sellers in a competitive market - arbitrarily decides the price of their commodity unlikely being a price taker as it dose as a seller in such a competitive industry. Alternatively, these monopolists are inclined to determine the quantity of goods and services sold at a profit-maximized price, leaving it to consumers to consider how many products are needed to purchase. Due to these monopolistic phenomena around the world, many arguments about the merits and harms to society have been caused. This critical review examines two sources which aim to introduce the concept of monopoly and the measurement of monopoly power. The first source is the chapter 12 of “Foundations of Economics” by Andrew Gillespie (24 Mar 2011); the second source is “SparkNote on Monopolies &Oligopolies” (http://www.sparknotes.com/economics/micro/monopolies/) by Sparknotes Editors. Whereas the book...
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...article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market. Keywords: market structure, pricing strategy, Potomac Edison Market Structures and Pricing Strategies Introduction Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization. Perfect Competition What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly elastic” (p. 104). In order for perfect competition to exist four conditions must be true, which are as follow: 1....
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...article analyzes the four main market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly. It provides a detail description of the market, as well as explains the pricing strategy a firm would pursue in that particular market. The article also concludes with a real world example of Visa pricing strategy by examining it oligopoly market structure. Visa has few competitors; however, it must continuously monitor its competitor’s actions in order to remain competitive in today’s market. While, Visa is currently out performing it competitors, they are constantly trying to expand their market. Keywords: market structure, pricing strategy, Potomac Edison Market Structures and Pricing Strategies Introduction Economist can divide today’s market into four different market structures, which are perfect competition, monopolistic competition, oligopoly and pure monopoly. The market structure will help the firm select their pricing strategy. Each market structure has a different pricing strategy the organization can use to achieve profit maximization. Perfect Competition What is perfect competition? Perfect competition is sometimes referred to as pure competition (Officer, 1966). According to Robinson (1934), perfect competition is “a state of affairs in which the demand for the output of an individual seller is perfectly elastic” (p. 104). In order for perfect competition to exist four conditions must be true, which are as follow: 1....
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... | | | | |Monopolistic | | | | |Competition | | | |CHAPTER OUTLINE | I. Describe and identify monopolistic competition. A. Large Number of Firms 1. Small Market Share 2. No Market Dominance 3. Collusion Impossible B. Product Differentiation C. Competing on Quality, Price, and Marketing 1. Quality 2. Price 3. Marketing D. Entry and Exit E. Identifying Monopolistic Competition 1. The Four-Firm Concentration Ratio 2. The Herfindahl-Hirschman Index 3. Limitations of Concentration Ratios 2. Explain how a firm in monopolistic competition determines its output and price in the short run and the long run. A. The Firm’s Profit-Maximizing Decision B. Profit Maximizing Might Be Loss Minimizing C. Long Run: Zero Economic Profit D. Monopolistic Competition and Perfect Competition 1. Excess Capacity 2. Markup E. Is Monopolistic Competition Efficient 1. Deadweight Loss 2. Making the Relevant Comparison 3. The Bottom line 3. Explain...
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...Economics for managerial decision making: Market structure Charles Brown Jr ECO/561 October 04, 2010 Frank Kingsland Economics for Managerial Decision Making: Market Structures Basis for the case study Each of the four cycles in this simulation relates specifically to the four market structures — monopoly, oligopoly, imperfect competition, and perfect competition. The learner plays the role of the newly appointed Chief Executive Officer of Quasar. As the CEO, the learner will approve decisions on the pricing of Neutron based on the cost and revenue structures for each market structure that Quasar transitions through. Cycle 1 – 2003 - Monopoly In this cycle, Quasar Computers introduces Neutron, the world's first all-optical portable notebook computer. This cycle is divided into three steps, each of which requires the learner to take a decision that will increase the profits for the firm. Decision points Step 1 - The price at which Neutron should be introduced to the market is ___2550_____? Step 2 - The advertising budget to be allocated and the price for Neutron is ____2,450___? Step 3 - The amount to be invested on internal processes improvements and the price for Neutron is _2200_____? Discussion question In spite of being a price-setter (a company that can set its own price), why would a monopoly player choose to pursue cost reduction and demand stimulation strategies? They would pursue a cost reduction and demand stimulation strategy by...
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...THE INCREASING RETURNS REVOLUTION IN TRADE AND GEOGRAPHY Prize Lecture, December 8, 2008 by Paul Krugman Princeton University, Woodrow Wilson School, Princeton, NJ 08544-1013, USA. Thirty years have passed since a small group of theorists began applying concepts and tools from industrial organization to the analysis of international trade. The new models of trade that emerged from that work didn’t supplant traditional trade theory so much as supplement it, creating an integrated view that made sense of aspects of world trade that had previously posed major puzzles. The “new trade theory” – an unfortunate phrase, now quite often referred to as “the old new trade theory” – also helped build a bridge between the analysis of trade between countries and the location of production within countries. In this paper I will try to retrace the steps and, perhaps even more important, the state of mind that made this intellectual transformation possible. At the end I’ll also ask about the relevance of those once-revolutionary insights in a world economy that, as I’ll explain, is arguably more classical now than it was when the revolution in trade theory began. 1. TRADE PUZZLES In my first year as an assistant professor, I remember telling colleagues that I was working on international trade theory – and being asked why on earth I would want to do that. “Trade is such a monolithic field,” one told me. “It’s a finished structure, with nothing interesting left to do.” Yet even before the arrival...
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...Course: - Edexcel HND in Business Module: - Business Environment Assignment Prepared by: Lecturer: Mr Term: Sepember-December2012 Course Start date: September2012 (Birmingham Central Campus) Introduction: This Assignment is about Business Environment and I have to complete the flowing tasks for the purpose of the assignment: Task 1 1. Types of Business Organisations, their purposes: There are three main types of Organisation in UK A) Private sector organisations. B) Public sector organisations. C) Voluntary sector organisations. The main types of Business organisation in the Private Sector is: The Sole trader: A sole trader is a business that is owned by one person. It may have one or more employees. It is the most common form of ownership in the UK. (e.g. Window cleaning, and Plumbing, etc.). Nowadays lots of people are setting up their own businesses by creating small web-based companies working from home. The Partnership: In a partnership, partners are personally liable for the debts of the business, although partners in a limited partnership (not to be confused with a limited liability partnership) who play no part in the management of the business, may have a limit on their liability set out in the Partnership Deed.. Companies: are owned by shareholders that each contributes a stock of money into a central pool. This pool of...
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...total workforce in the country. Tourism, a major sub-sector in Australia’s hospitality industry is made up of both foreign and domestic tourists. Foreign tourists account for 30% of the country’s tourists while the remaining 70% is usually covered by local tourists. 2.0 Market structure Australia’s hospitality industry operates under a monopolistic type of competition. Under monopolistic competition, there are usually many firms offering the same products to consumers. The services and products from firms in a monopolistic competition are usually differentiated to create a competitive edge (CHON & MAIER, 2010, p. 14). Monopolistic competition is different from perfect competition because, goods and services from firms in a monopolistic competition are not usually the same, a case that is the opposite of perfect competition. According to JAMES (2005, p.32), differentiation of products and services in Australia’s hospitality industry is usually along social lines. The country has executive hotels that cater for the wealthy in the society in addition to the middle-class hotels that target the average individual. In line with monopolistic competition, the country’s hospitality industry...
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