Weekly Reflection Week 3
Weekly Reflection
ECO/365
March 4, 2013
Week 3
Weekly Reflection
Various Market Structures and Characteristics The conditions for a monopolistic market are as follows: there is only one firm, which is large in size. The firm has to provide the market’s supply, and there are high barriers to entry. There are no close substitutes for the goods the monopoly firm provides or produces, and the monopolistic market operator should make up the entire market. The conditions for a monopolistic competitive market are as follows: the market has many small firms, there are no barriers to enter the market, each firm offers a different kind of product to the market, and this market has a normal, downward-sloping demand curve. The conditions for an oligopolistic market are as follows: after oligopolistic firms have made a decision, they should consider the reaction of other firms; there are few firms in the market, they are mutually interdependent, and they can be collusive or non-collusive. Obviously, in some markets, the oligopoly can be part monopoly. Another factor is that some participants of these markets may, from time to time, receive legal challenges from others.
Evaluate the effectiveness of competitive strategies within market structures
Within each market structure, competition plays a role in the establishment of the market. Perfectly competitive markets lay the foundation for competition in monopolies, and oligopolies. To consider perfectly competitiveness, firms must offer the same products, among other qualities. This strategy ensures that competition among firms is truly competitive as each firm is offering the same products. Monopolies however use the strategy of exclusivity to yield market space. In a monopoly, firms are the sole provider of a product to consumers and have no competition. To be the one and only providing a product yields market space in this structure. There are also monopolistic competition structures that provide
ECO/365
March 4, 2013
Week 3
Weekly Reflection
Various Market Structures and Characteristics The conditions for a monopolistic market are as follows: there is only one firm, which is large in size. The firm has to provide the market’s supply, and there are high barriers to entry. There are no close substitutes for the goods the monopoly firm provides or produces, and the monopolistic market operator should make up the entire market. The conditions for a monopolistic competitive market are as follows: the market has many small firms, there are no barriers to enter the market, each firm offers a different kind of product to the market, and this market has a normal, downward-sloping demand curve. The conditions for an oligopolistic market are as follows: after oligopolistic firms have made a decision, they should consider the reaction of other firms; there are few firms in the market, they are mutually interdependent, and they can be collusive or non-collusive. Obviously, in some markets, the oligopoly can be part monopoly. Another factor is that some participants of these markets may, from time to time, receive legal challenges from others.
Evaluate the effectiveness of competitive strategies within market structures
Within each market structure, competition plays a role in the establishment of the market. Perfectly competitive markets lay the foundation for competition in monopolies, and oligopolies. To consider perfectly competitiveness, firms must offer the same products, among other qualities. This strategy ensures that competition among firms is truly competitive as each firm is offering the same products. Monopolies however use the strategy of exclusivity to yield market space. In a monopoly, firms are the sole provider of a product to consumers and have no competition. To be the one and only providing a product yields market space in this structure. There are also monopolistic competition structures that provide
References: Colander, D.C. (2010). Economics (8th Ed.). New York, NY: McGraw-Hill/Irwin