Market structures play a key role in the way a firm is able to do business. By understanding what sort of market structure that a firm is placed in, that firm will be able to see if the cost of business is worth continuing to fight for. The factors that separate the different types of market structures can be the difference in whether or not a start-up firm will be able to become successful or be driven from business by the major players that currently exist in that particular market structure. It is by understanding and playing to the market structure that certain companies such as Samsung Electronics have been able to become so successful. Different market structures place emphasis on different factors, however one truth is held. In the end, every firm is simply trying to push its products or services onto its consumer base.
Four types of market structures - YouTube
A third market structure seen in the economic world is the monopoly. The monopoly is characterized as a market in which there is only one provider for a good or service to consumers (Econ Guru). Within this type of market structure, the barriers for entry are extremely high as the firm with all of the power in the market can undercut its prices and force competitors out of the market. From a buyer’s perspective, the barriers are low as their selection for products or services is so limited. In a pure monopoly with only one firm controlling the market, the type of product is very limited; in fact it is exclusively limited to what that particular firm offers to its consumers (Riley, 2012). Being the controlling power of the market, a firm operating within a monopoly is considered to be a price maker in that it will be able to continually set, raise, and lower the cost of its offered product or service. Within this type of market structure, the economic efficiency does run the risk of being damaged as the controlling firm will not have to deal with any competition, which could allow for the firm to become inefficient over time (Riley, 2012). The same holds true for the innovative behavior within a monopolistic market. The controlling firm has no real reason to be constantly reimagining and redesigning its products or services and can instead release upgrades and updates at its own pace with no real urgency. Although, it is worth noting that a firm that holds a monopoly on the market could also have a strong innovative behavior because it is able to spend a great deal of its profits on research and development.
Different Types Of Market Structure Free Essays
Labour market outcomes are also influenced by the type of market structure (the degree of competition), union collective bargaining and various government laws (such as minimum wage laws)
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