Ability to explain the nature of Market Structure Analysis, and to discuss the continuum of "degree of competitiveness." Ability to Identify four types of market structure, and to align them along the degree of competitiveness continuum. Ability to identify and explain key insights that emerge from the study of various market structures.
Four types of market structures - Duration: 2:29
What are the key features of the four types of Market Structures we have studied? Explain in what respects do they differ. Where necessary provide examples to your answer.
2004 South-Western The Four Types of Market Structure Number of Firms
Market structures provide a model with which to compare the characteristicsof real markets. Market structure is defined by three characteristics:Number of competitors in the marketEase of entry of new competitorsThe degree to which competitors' products are the same or different.Teaching Strategy: Some instructors also include in market structure whether competitors act independently or not and consumers' and producers' knowledge of market conditions.Teaching Strategy: Consider drawing a circle representing the world on the board and thendividing the world into four types of market structures. Put perfect competition on the South Pole, suggesting there are probably about as many trulyperfectly competitive markets as people living there. Then add monopolisticcompetition in the Southern Hemisphere and oligopoly in the Northern Hemisphererepresenting most of the markets in the world. Finally, add monopoly to the North Pole and ask whatbenevolent monopolist lives there!
7 Explain the four types of market structure
Cost and Revenue Curves
This week I took the Market Structure Simulation for Quasar Computers. This simulation allowed me to analyze the four types of market structure. This includes monopoly, oligopoly, monopolistic competition, and perfect competition.
In 2003, Quasar Computers started as a monopoly branding their product Neutron. Neutron was the first optical computer. The product was five times as fast as other computers because of the processor and high speed optical conductors. Executives at Quasar Computers had to determine a cost consumers would buy in. In 2004, they had to determine what amount should be spent on advertising. Increasing advertising costs and keeping the price where marginal revenue = marginal costs worked well causing an increase in sales and large profits.
In 2006, Neutron’s patent expired. Orion Technologies has entered a similar product into the market. Quasar Computers is experiencing an oligopoly. The goal is to keep prices low and successfully advertise the product.
In 2010, optical notebooks are at the mid-point of the product life cycle moving into a monopolistic competition. Customers are using them for business and personal use. Now there are multiple companies offering the product the focus should be increasing demand while keeping expenses low. Less money should be spent on advertising.
In 2013, optical notebooks have matured and profit margins have stabilized moving into a perfect competition. Quasar Computers has now acquired stake in one of the supplier for Optical Display Screens (ODS), Opticom. The goal is to make this a profitable venture and cost-reduction is key. As discussed above competition will eventually arise.
During this 10 year run Quasar Computers has moved through the four levels of market structures. They have been careful in their decision-making process determining pricing, advertising, and production. They must move into the future with new innovations and ideas....