Market Structures

According to McConnell and Brue (2004), a monopoly occurs when a single firm is the sole producer of a product for which no close substitutes exist. Since the United States Postal Service (USPS, 2008) has no close substitutes, competition does not exist. The Postal Service’s universal service obligation (USO) is broadly outlined in multiple statutes and encompasses multiple dimensions: geographic scope, range of products, access to services and facilities, delivery frequency, affordable and uniform pricing, service quality, and security of the mail (USPS 2008). When monopolists are not protected by law from competition, the companies may have to keep their prices low in order to keep competition from entering the market. However, USPS is considered a pure monopoly and barriers of entry are in place. USPS is the only federal operating system that sends and delivers mail. USPS has competition in the market with services such as package delivery. Now, the agency has to compete with major companies such as UPS and FedEx. United States Postal Services depends on operation funding from postage and fees. Comparatively, the Postal Service provides a higher level of service and does so at low, affordable prices (USPS, 2008). The University of Phoenix (UOP) is an institution for profit and it operates in a market structure with pure competition. According to McConnell and Brue (2004), “pure competition involves a very large number of firms producing a standardized product (that is, a product identical to that of other producers, such as corn or cucumbers). New firms can enter or exit the industry very easily,” (University of Phoenix, 2004). There are many universities, colleges, community colleges, and vocational schools for students to choose from. They offer education in the U.S. and overseas. Different educational institutions offer programs that are identical or similar to UOP. However, the tuition is not the same for all schools. UOP does not have a perfect substitute

References: Forgang, W. G., & Einolf, K. W. (2006). Management Economics: An Accelerated Approach. M.E. Sharpe . Iran: OPEC May Need Further Output Cuts. (2008). World News Connection. Retrieved November 8, 2008, from EBSCOhost database. Kaplan, J. (1999). Unit 11 – Monopolistic Competition and Oligopoly. Retrieved November 8, 2008, from http://spot.colorado.edu/~kaplan/econ2010/section11/section11-main.html McConnell, C. R., & Brue, S.L. (2004). Economics: Principles, Problems and Policies (16th Ed). New York: The McGraw-Hill Companies. Report on Universal Postal Service and the Postal Monopoly. (n.d.). Retrieved November 7, 2008, from http://www.usps.com/postallaw/universalpostalservice.htm