Differentiating Between Market Structures

Differentiating Between Market Structures
December 1, 2014

Differentiating Between Market Structures in Verizon Wireless
Understanding market structures is important in understanding the competitive environment for companies. The various market structures that may be prevalent in an industry are: oligopoly, monopoly, perfect competition or monopolistic competition. Verizon Wireless “is an innovative wireless communications company that connects people and businesses with the most advanced wireless technology and service available.” ("Verizon Wireless - About Us", 2014) Verizon Wireless provides service to 106.2 million retail connections and is the largest wireless provider in the United States. This paper will provide an evaluation of the market structure, competitive strategies and recommendations for strategies that will help the company maximize profits. Market Structure

Verizon Wireless operates within an oligopoly market structure. An oligopoly market structure is defined as a market in which that market or industry is dominated by a small number of sellers. In the wireless industry, there are a small number of competitors that dominate the industry, with a number of smaller companies competing in the same industry but in a different space of customers. The top wireless companies are Verizon Wireless, AT&T, Sprint and T-Mobile. Although there is a variance in the pricing that each company offers, because the industry is dominated by these four carriers, each carrier has the capability of maintaining pricing, without having to reduce too much due to competing offers. Due to FCC regulations, cost of capital for startup, customer preference, etc. there are barriers for companies that want to enter the wireless industry and compete with Verizon Wireless. For example, customers with Verizon Wireless pay a small premium, in comparison to the competitors, for network reliability. Verizon Wireless offers the largest 4G LTE footprint across the...

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