Operations Decision Dr. Izzeldin Bakhit ECO 550 Managerial Economics and Globalization March 3rd, 2014 Operations Decision There are a lot of frozen food and low calorie microwavable food options available in the market. A few years ago people were not able to purchase the microwavable food but with the increase in income, people can now afford an easier lifestyle and can change the way they cook breakfast, lunch, and dinner. Because microwavable food easy to cook, people are replacing
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the price that yields the largest possible profit. (Stigler, 2013) What is an Oligopoly? Oligopoly is an industry can only have a handful of large firms; it makes it very difficult for new firms to enter into the industry. The firm products can be similar or different, but the action of one firm will impact others in the oligopoly. (Wessels, 2000) What is a Cartel? A Cartel is a group of firms in an oligopoly that get together and agree to cooperate to the detriment of consumers and other
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Evaluate the effectiveness of monopolistic competition and oligopolies in meeting the needs of producers and consumers. A market is a place where buyers and sellers meet to exchange money for goods and services. There are four market structures; perfect competition, monopolistic competition, oligopoly and monopoly. Each structure of market operates in their own ways with each with their own characteristics; each structure has its own number and size of the firms, the level of the competition,
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Monopolistic Competition is a market structure in which there are several or many sellers; each produce similar, but slightly differentiated products. Differentiation can be on the basis of colour, design, size, taste, fragrances, etc. Each producer can set its price and quantity without affecting the marketplace as a whole. Wikipedia explains the concept as, “A common market form. Many marketers can be considered monopolistically competitive, often including the markets for restaurants, cereal
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An oligopoly market structure can be differentiated from others because it has distinct features such as competition among a few firms, high concentration ratio and barriers to entry, non price competition, differentiated products and high level of interdependence between firms. The report also outlines and describes why the UK detergent industry which is dominated by a few firms reflects the model of an oligopoly. Several real life examples have been used to confirm the theory of oligopoly. Moreover
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In competitive markets there are many buyers and sellers in the market and the goods that are offered mostly the same. Because there are many buyers and sellers that offer the same good there competitive markets have no real impact on market prices. Buyers and sellers can increase their selling price, but consumers will go somewhere else to get the good cheaper. This happens when there are many companies that sell the same product. Maximizing profits would have to come internally, selling more product
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such that no participants are large enough to have the market power to set the price of a homogeneous product. Demand and Supply In a perfectly competitive market, a firm's demand curve is perfectly elastic. [pic] Demand and supply in oligopoly The two that are most frequently discussed, however, are the kinked-demand theory and the cartel theory. The kinked-demand theory is illustrated in Figure and applies to oligopolistic markets where each firm sells a differentiated product. According
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Disadvantages 1. Exploitation of consumers- a monopoly market is best known for consumer exploitation. There are indeed no competing products and as a result the consumer gets a raw deal in terms of quantity, quality and pricing. The firm may find it easy to produce inferior or substandard goods if it wishes because t the end of the day they know very well that the items will be purchased as there are no competing products for the already available market. 2. Dissatisfied consumers- consumers get
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and seller of a product and there would be no close substitutes. A example of this would be say Microsoft with Windows or Apple with the MAC. Now we can look at the oligopoly is basically a market in which there are only a few sellers , each whom offer similar or sometimes identical to other firms. A few characteristics of a oligopoly are to start interdependent firms so this could be like companies who buy product from one another in order to produce their own goods. Again there are fewer sellers
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but higher prices than perfect comeptition. We will get variety, but must pay for to get it. Besides advertising, we should expect give-aways, coupons, warranties, etc. Oligopoly 1. Few sellers 2. Same basic product, but much product differentiation. 3. Firms must price strategically 4. Difficult entry Oligopoly firms behave strategically: They consider not only the response of consumers to their actions, but also the response of other rival firms in the industry. Game Theory:
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