Oligopoly: The Microeconomics Of International Business

Great Essays
The Microeconomics of International business
Market structure creates market power and investment. The four market structures: Perfect competition, Monopolistic competition, Oligopoly and Monopoly, divides industries by (Sloman, Hinde and Garratt, 2010, p. 213) “the degree of competition.” Thus, a firm’s market structure depends upon its competition.
Perfect competition
(Sloman, Hinde, Garratt, 2010, p. 213) “A market structure that has many firms producing identical products, price takers and has freedom of entry.” Thus, perfect competition has many firms producing similar or same products at different prices. Buyers and sellers do not influence pricings and, firms can enter the industry at any time.
Monopolistic competition
(Sloman, Hinde, Garratt 2010, p. 214) “A market with quite a lot of firms with freedom for new firms to enter.” Thus, a monopolistic competition has many firms and has freedom of entry for other firms yet, product differentiation from other firms.
Oligopoly
(Sloman, Hinde, Garratt 2010, p. 214) “There are only few firms and entry is restricted.” Meaning this market is limited in both, the firms and the entry of freedom.
Monopoly
…show more content…
235) “there is freedom of entry for new firms” meaning ease to break into the market providing the same product, due to the entry freedom. Consumers (Sloman, Hinde, Garratt, 2010, p. 217) “Fully aware of price, quality and availability of the product.” Therefore, consumers benefit, as they know about the product when purchasing. Perfect competition cost is a (Sloman, Hinde, Garratt, 2013, p. 47) “price taker- raising prices would not sell and lose sales to its competitors.” Thus, firms have to accept the market price and raising prices has consequences. Also, (Sloman, Hinde, Garratt, 2010, p. 216) “consumers are price takers and they have no control over prices” meaning, consumers must pay at the set price and cannot change

Related Documents

  • Improved Essays

    In ling run the price will be equal to the marginal cost. In perfectly competition the market structure clearly helps buyers. In monopoly holds substantial market power, so firms set prices using profit-maximizing rule. Without having to worry about competition driving the price down to marginal cost. And so both have market share, price control and barriers to entry.…

    • 729 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Because of this, each seller from each firm holds a very small portion of the overall market. Quite like perfect competition, monopolistic competition also has many sellers within its market. Though it differs from perfect competition because the firms in a monopolistic competition sell varied products.…

    • 1160 Words
    • 5 Pages
    Improved Essays
  • Great Essays

    Each firm acts independently and has a limited share of the market. So, and individual firm has limited control over the market price while large number of firms leads to competition in the market. Despite of large number of sellers, each firm is in position to exercise some degree of monopoly through product differentiation. Product differentiation refers to the products on the basis of brand, size, color, shape and etc. The product of a the firm is close but not perfect a perfect substitute for other firm.…

    • 1640 Words
    • 7 Pages
    Great Essays
  • Improved Essays

    Though monopolists are sole producer in the market, they are price setters or quantity setters rather than price takers. As a result they take the advantage of economic profit in both short and long run. In the long run, monopolists maintain the existence of economic profit depending on the barriers to entry, to prevent other firms from sapping away their profits. In the oligopoly market, more than one firm can collude thereby restricting supply in order to ensure the price of the product to remain high to ensure all of the firms in the industry achieve an economic profit . The same principle applies in the case of a duopoly market.…

    • 739 Words
    • 3 Pages
    Improved Essays
  • Great Essays

    Business Rivalry Essay

    • 1544 Words
    • 7 Pages

    This constrain analyses how simple or troublesome it is for contenders to join the commercial centre in the business being inspected. The less demanding it is for a contender to join the commercial centre, the more noteworthy the danger of a business' piece of the overall industry being drained. Obstructions to passage incorporate supreme cost points of interest, access to inputs, economies of scale and very much perceived brands. 5.The closeness of substitutes to an industries products. This compel contemplates how simple it is for shoppers to change from a business' item or administration to that of a contender.…

    • 1544 Words
    • 7 Pages
    Great Essays
  • Superior Essays

    Classical economists were steadfast proponents of the markets, contending markets without interference can naturally maximize both individual and public interests. The economic orders that benefit the whole society emerge as the unconscious result of actions and voluntary transactions of each individual (Friedman & Friedman 2011). Competition within market is positive, through which the pursuit of self-interests by individual, the basic unit of society, can generate the socially beneficial outcome. The reason is that producers would strive to increase efficiency and decrease the cost of production, in their attempts to augment personal profit, thus the price of commodities would be kept low and resources are ensured to be used in the most…

    • 1861 Words
    • 8 Pages
    Superior Essays
  • Improved Essays

    As the United States increases their imports from those countries, it means that consumers are receiving much cheaper products. Location, price, quality and the need for a product are the most important things to note when it comes to internationally. Location matters because if a country is in need a product, they are able to receive it quickly from a nation near by instead of having to wait one or two business days. Price is also a major component regarding international trade because with competition, sometimes a consumer wants the cheapest product so they can profit more. Particular countries or stores are all about quality and do not want to cheat their buyers.…

    • 1054 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    Nike's Market Structure

    • 1452 Words
    • 6 Pages

    Monopolistic competition and oligopoly both have some feature of competition and some feature of monopoly. But oligopoly and monopolistic competition is quite different. Monopolistic competition have many sellers, while oligopoly has few sellers. A monopolistically competitive market departs from the perfectly competitive ideal because each of sellers offers somewhat different products (Mankiw, 2008). There are three condition that can describe monopolistic, which are have many sellers, product differentiation and free entry.…

    • 1452 Words
    • 6 Pages
    Great Essays
  • Superior Essays

    Firstly, it is important to mention that the perfectly competitive market is perfectly efficient, which leads to the price being Pareto optimal, when any shift in the price would benefit one party at the expense of the other. The overall economic surplus is maximized, that by the way equals the sum of the consumer and producer surpluses. In a perfectly competitive market, the market dictates the price, therefore the suppliers can not affect the price of the good or service. The price of the good or service in a perfectly competitive market and the marginal costs of manufacturing that good or service are equal. Also, the prices are kept on its minimum because of the combination of (long-run) minimum average cost production and firms making only normal profits.…

    • 1046 Words
    • 5 Pages
    Superior Essays
  • Improved Essays

    Lemonade Stand Case Study

    • 1521 Words
    • 7 Pages

    If it so happens that companies get excess profits, then the machinations of the market would have new entrants to stabilize the profits by pushing them back down (Makowski & Ostroy, 2001). In a normally and naturally operated competitive market, advertising is used as a tool amongst many to confer a competitive advantage upon a business over others. Advertising thus works to convince potential customers to buy from one business at the expense of another one. However, advertising within the prism if perfect competition usually is geared towards the products being sold as opposed to the brand. This is because under no circumstance can a company acquire a super majority in terms of market share.…

    • 1521 Words
    • 7 Pages
    Improved Essays