Market structure Research Paper Example | Topics and Well Written Essays - 2000 words

Market structure - Research report ExampleThis implies that product differentiation exists and each one(a) is capable of satisfying divergent consumer needs. Barriers to entry atomic number 18 few thus explaining why the competitors atomic number 18 umteen in number (Makiw, 2008). The oligopolistic market structure is one in which a small number of players operate, and they can control the market. Usually, these players are large enough and written report for a hard market share. They make decisions interdependently and are highly motivated by the need to cooperate. Therefore, players hold a degree of control over market conditions. Furthermore, this model is characterized by many barriers to entry. A monopoly is a market in which only a single producer exists. The person is therefore capable of drill considerable control over the market. Products sold do not have close substitutes thus do consumers to stick to them. Normally, the monopoly thrives in water distribution, ele ctricity and grease-gun industries. Barriers to entry are overly quite high. 2. truly life example of a market structure in my local city A graduated table retail outlet is an example of an oligopolistic market in my city. The organization has relatively few competitors in the gas pump market. Retail outlets may be high in number but the number of companies supreme those outlets is relatively few. Furthermore, Shell is a large company that accounts for about 20% of the market share. This degree of tautness in the oil retail industry makes Shell gullible to collusions with its rivals. For a number of times, the company has been accuse of setting artificial prices that do not relate to world oil prices. Regardless, the organizations products are often sold for a price that is relatively close to market rates. In oligopolistic markets, this is typical for many organizations as competition based on price could lead to inefficiencies. Barriers to trade are also substantial as certa in restrictions exist. Shell has control over oil as a natural resource. It is also a vertically integrated firm in which other aspects of oil drudgery take place. The facilities and equipment compulsory to carry out this work are quite expensive. Therefore, new entrants would not have the economies of scale required to make significant profits in the market. They would have to raise their prices in order to cover production costs, yet this would drive away consumers who would seek inespensice alternatives. Shell also enjoys large revenue streams from its elaborate line of credit model. Therefore, it is likely that a competitor interested in entering the market would have difficulties advertising or matching Shells marketing expenditure (Frank and Bernanke, 2009). 3. How high entry barriers into markets influence long legislate profitability Entry barriers may come in the form of patents, government licensing, benefits that accrue from economies of scale or resource control. In dustries with high entry barriers testament not have many alternative suppliers. Therefore, market forces will be weakened. Profitability will mostly depend on the supply side of the equation. Usually, when a trafficker sets their prices, they normally do this on the basis of their costs. Marginal costs refer to those additional expenditures incurred when a vender makes an additional item. In markets with low entry barriers, sellers will price their commodities on the basis of