Evolution of Monopolistic Competitive Market
Evolution of Monopolistic Competitive Market
Brand loyalty, Generic Entry and Price Competition in MP3 Player Market
Introduction
In this paper I will reflect the evolution of the monopolistically competitive market and by doing so guiding the concept with an insight of the Mp3 player market and its actors. One of the actors on the Mp3 market is the IPod created by the innovating company Apple. The IPod was realised in March 2004 and was immediately a success. Easy to manoeuvre and with its attractive and appealing look it took the profits from other existing firms and became the current market leader. Looking at the concept and the dynamics of a monopolistically competitive market we can foresee the future for the IPod and other firms in the Mp3 player market. By doing so we can predict losses by designing business strategies for monopolistically competitive industries.
Characteristics of Monopolistically Competitive Market
To be able to describe the Mp3 player market we firstly need to explain different market structures and the theory of monopolistically competitive markets. There are different market structures, perfect competitive market, such the supermarkets, where the market only determines price. The opposite market structure monopoly, a single firms dominates the market, can determine both its price and output. Finally there are imperfect markets like oligopoly, where a couple of firms have monopoly over a product, and then monopolistically competitive markets. As it implies it’s a mix of perfect competition and monopoly where the Mp3 player is operating in.
“Monopolistic competition is the form of imperfect competition, in which the market has sufficient few firms that each one faces a downward sloping demand curve but enough that each can ignore the reaction of rivals to what it does,” stated by Joseph Stiglitz (1993 p. A14, 353-356).
Stiglitz description refers to a market where a few number of firms compete on product quality, price,
Brand loyalty, Generic Entry and Price Competition in MP3 Player Market
Introduction
In this paper I will reflect the evolution of the monopolistically competitive market and by doing so guiding the concept with an insight of the Mp3 player market and its actors. One of the actors on the Mp3 market is the IPod created by the innovating company Apple. The IPod was realised in March 2004 and was immediately a success. Easy to manoeuvre and with its attractive and appealing look it took the profits from other existing firms and became the current market leader. Looking at the concept and the dynamics of a monopolistically competitive market we can foresee the future for the IPod and other firms in the Mp3 player market. By doing so we can predict losses by designing business strategies for monopolistically competitive industries.
Characteristics of Monopolistically Competitive Market
To be able to describe the Mp3 player market we firstly need to explain different market structures and the theory of monopolistically competitive markets. There are different market structures, perfect competitive market, such the supermarkets, where the market only determines price. The opposite market structure monopoly, a single firms dominates the market, can determine both its price and output. Finally there are imperfect markets like oligopoly, where a couple of firms have monopoly over a product, and then monopolistically competitive markets. As it implies it’s a mix of perfect competition and monopoly where the Mp3 player is operating in.
“Monopolistic competition is the form of imperfect competition, in which the market has sufficient few firms that each one faces a downward sloping demand curve but enough that each can ignore the reaction of rivals to what it does,” stated by Joseph Stiglitz (1993 p. A14, 353-356).
Stiglitz description refers to a market where a few number of firms compete on product quality, price,
Bibliography: Porter’s five forces- A model for industry analysis (1999) http://www.quickmba.com/strategy/porter.shtml (2010-12-03) IPod Market share http://www.macworld.com/article/140162/2009/04/appleearnings.html (2010-12-12) Microsoft Zune Market Share http://www.marketwatch.com/story/microsofts-zune-continues-to-struggle-2009-07-29 (2010-12-12)