Market Structures and Pricing Strategies Essay Example | Topics and Well Written Essays - 2750 words

Market Structures and Pricing Strategies - analyze ExampleThe basic understanding underlining the case arena is that the four basic social anatomical structures are perfect competition, monopoly, monopolistic competition and oligopoly. amend Competition and Monopoly are the extreme forms and most of the securities industrys in existence lie amongst the two extremes. It has been observed by economists that perfect competition and monopoly are theoretical. During 1930s Edward Chamberlin of Harvard University and Joan Robinson of Cambridge University tried to make the study of market structures more realistic. The structure they analyzed is called monopolistic competition. The concept of perfect competition was first introduced by Adam Smith in his book Wealth of Nations. Later on, it was improved by Edgeworth. However, it received its execute formation in andiron Kights book Risk, Uncertainty and Profit. Perfect competition is the market structure where you have large number o f buyers and sellers. The sellers sell identical products. An instance of Perfect Competition is the market of bathe soaps. Key characteristics of Perfect Competition are 1.Knowledge is freely available2.No barriers to entry3.Firms educate identical products4.No single firm can influence the harm. The firm is the price taker and the price is fixed by the industry demand and supply.5.There are large number of firms in the market6.The designer of the firms is profit maximisation noncompetitive competition and Oligopoly lie among the two extreme market structures of Perfect Competition and Perfect Monopoly. ... Later on, it was improved by Edgeworth. However, it received its complete formation in Frank Kights book Risk, Uncertainty and Profit (1921). As stated on http//economicsconcepts.com/perfect_competition.htm Perfect competition is the market structure where you have large number of buyers and sellers. The sellers sell identical products. An example of Perfect Competition is the market of dishwashing soaps. Features of Perfect Competition Key characteristics of Perfect Competition are 1. Knowledge is freely available 2. No barriers to entry 3. Firms produce identical products 4. No single firm can influence the price. The firm is the price taker and the price is determined by the industry demand and supply. 5. There are large number of firms in the market 6. The motive of the firms is profit maximisation 2. Monopolistic Competition Monopolistic competition and Oligopoly lie between the two extreme market structures of Perfect Competition and Perfect Monopoly. What is Monopolistic Competition? In this market structure, there are many buyers and sellers, like in a perfect competition. However, the products are more differentiated. An example could be Restaurants, where every restaurant may specialize in a different cuisine. As Karen collins puts it in the book Exploring Business, Products can be differentiated in a number of ways, including quality, s tyle, and convenience, location, and brand name. Features of Monopolistic Competition The Key features of Monopolistic Competition as mentioned in the book Economics Principles and Policy by William j. Baumol and Alan S. Blinder are 1 Large number of buyers and sellers 2 Freedom of entry and exit 3 Perfect Competition 4 Heterogeneous