Differentiating Market Structures
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- Date Submitted: 07/11/2015 01:10 PM
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Differentiating Between Market Structures
Marie Franco
ECO/365
May 4, 2015
Dr. Kevin Peek
Differentiating Between Market Structures
Supply and Demand is one of the most important factors in economics. In some markets it allows for perfect competition to occur; while in others it simply helps to regulate market structure. A market structure refers to the competitive market the company is in. There are different characteristics to each market structure.
When it comes to the perfect competition structure the participants are not allowed to influence the price of goods but rather be based on the cost of supply and demand for regulation. On the other hand a monopoly would be the complete opposite, because there would only be one company to that supply and demand. With a monopolistic structure the company has complete control of the price. Another market structure would be oligopoly. An oligopoly is very similar to a monopoly, there are a few companies within the market structure that dominate and allow them to become price makers for the products as well.
Coca-Cola Co. and Pepsi Inc. are part of oligopolistic competition given that both companies offer products that are differentiated but are easily substituted for one another. (As of 2014, Coca-Cola Co. holds 42% of the market share and Pepsi Inc. holds 30% of market with the remainder being held by other companies who don’t have as much leverage (Nasdaq, (2014).) Being that these two companies are in the same line of product and are direct competitors in the soft drink industry; they fall perfectly into the oligopolistic structure. These two companies are well established globally and any other company that tries to join in the competition fails because Coca-Cola and Pepsi are simply dominating the market.
An Oligopoly is a market structure that is controlled by very few companies. In some cases oligopolies result from collusion among companies to control competition and receive more profit. These...
Marie Franco
ECO/365
May 4, 2015
Dr. Kevin Peek
Differentiating Between Market Structures
Supply and Demand is one of the most important factors in economics. In some markets it allows for perfect competition to occur; while in others it simply helps to regulate market structure. A market structure refers to the competitive market the company is in. There are different characteristics to each market structure.
When it comes to the perfect competition structure the participants are not allowed to influence the price of goods but rather be based on the cost of supply and demand for regulation. On the other hand a monopoly would be the complete opposite, because there would only be one company to that supply and demand. With a monopolistic structure the company has complete control of the price. Another market structure would be oligopoly. An oligopoly is very similar to a monopoly, there are a few companies within the market structure that dominate and allow them to become price makers for the products as well.
Coca-Cola Co. and Pepsi Inc. are part of oligopolistic competition given that both companies offer products that are differentiated but are easily substituted for one another. (As of 2014, Coca-Cola Co. holds 42% of the market share and Pepsi Inc. holds 30% of market with the remainder being held by other companies who don’t have as much leverage (Nasdaq, (2014).) Being that these two companies are in the same line of product and are direct competitors in the soft drink industry; they fall perfectly into the oligopolistic structure. These two companies are well established globally and any other company that tries to join in the competition fails because Coca-Cola and Pepsi are simply dominating the market.
An Oligopoly is a market structure that is controlled by very few companies. In some cases oligopolies result from collusion among companies to control competition and receive more profit. These...