Differentiating Between Market Structures: Competitive Balance Between Companies
Differentiating Between Market Structures
Windol McNutt
University of Phoenix
ECO/365
Principles of Microeconomics
Professor Jong Yi
July 6, 2015
Differentiating Between Market Structures
In business, there is considered to be a competitive balance between companies that are unique in their industry. There are industry segments that are dominated by one or two companies such as the satellite television market. Other industries have multiple business of varying size that are in direct competition for market share, which is commonly known as market structure. The author of this paper will focus on Kroger Company, which is a grocery/pharmacy that is widely known in the southern region of the nation. Kroger would come under the term of a monopolistic competition within the grocery industry.
Defining a Monopolistic Competition
Kroger would come under the term of a monopolistic competition within the grocery industry. Monopolistic competition will occur when we have several different companies competing for the market share for similar products. There are generally no or very low barriers for entry and this means that it is relatively easy for a new startup company to enter the market place and become a competitor. …show more content…
These products are considered to have high elasticity of demand, which means the consumers have a variety of alternatives to choose from. If Kroger would decide to raise their pricing on certain items, the consumer of a monopolistic competition market would be easily able to locate an alternative within the local community (Coricelli 2006). This differentiates between monopolies and oligopolies, in which have only a small number of direct competitors. These market structures should still conduct product differentiation, however, they will rarely have any price
Windol McNutt
University of Phoenix
ECO/365
Principles of Microeconomics
Professor Jong Yi
July 6, 2015
Differentiating Between Market Structures
In business, there is considered to be a competitive balance between companies that are unique in their industry. There are industry segments that are dominated by one or two companies such as the satellite television market. Other industries have multiple business of varying size that are in direct competition for market share, which is commonly known as market structure. The author of this paper will focus on Kroger Company, which is a grocery/pharmacy that is widely known in the southern region of the nation. Kroger would come under the term of a monopolistic competition within the grocery industry.
Defining a Monopolistic Competition
Kroger would come under the term of a monopolistic competition within the grocery industry. Monopolistic competition will occur when we have several different companies competing for the market share for similar products. There are generally no or very low barriers for entry and this means that it is relatively easy for a new startup company to enter the market place and become a competitor. …show more content…
These products are considered to have high elasticity of demand, which means the consumers have a variety of alternatives to choose from. If Kroger would decide to raise their pricing on certain items, the consumer of a monopolistic competition market would be easily able to locate an alternative within the local community (Coricelli 2006). This differentiates between monopolies and oligopolies, in which have only a small number of direct competitors. These market structures should still conduct product differentiation, however, they will rarely have any price