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About this sample
About this sample
Words: 811 |
Pages: 2|
5 min read
Published: Jul 17, 2018
Words: 811|Pages: 2|5 min read
Published: Jul 17, 2018
Each branch has its own market specificity - the production of various goods, a different composition of producers, the size of enterprises, the features of technology, the composition and specificity of consumers, the specifics of competition.
In microeconomics, the most typical market structures (market models) are generalized and the behavior of manufacturing firms is studied, leading to the receipt of the greatest benefits for them-the receipt of the maximum profit. At the heart of these generalizations, specific recommendations are developed that have importantly applied importance in the choice of the company's behavior strategy in specific market conditions.
The object of the analysis of competition is the branch. For example, a group of competitors producing goods(services) and directly competing with each other. The purpose of the analysis is to identify the competitive advantages of the firm and the choice of a competitive strategy.
There are four main market structures: perfect competition, monopolistic competition, oligopoly, and monopoly.
Perfect competition indicates market structure, in which a plenty number of small companies compete against each other. Moreover, companies do not have a significant influence on the power of the market. Consequently, the manufacturer generally produces the absolute l level of production, which in turn lead to market has many buyers and sellers trading identical products so that each buyer and seller is a price taker. Perfect competition relies on the following elements:
• All small companies are focused to maximize profits.
• The goods offered by the various sellers are largely the same.
• There are no specific preferences between different sellers. It does not matter for the customer from which firms buy the products.
• All companies have free access and exit to the market.
• There are perfect information and knowledge about homogenous products.
At present, according to Nielson statistics, 3885567619 out of the global population 7519028970 people use the internet. Approximately 3.9 billion internet users are both producers and consumers. The above-mentioned example indicates that the internet is a market, where a myriads number of consumers/producers operate without any influence on market power which in turn lead to equal opportunities in this market, exemplifying one of the features of perfect competition.
Internet-related industries. The internet has a strong influence on perfect competition market due to the fact that the internet has made the way of comparison and check prices easily, quickly and efficiently (perfect information). Consequently, selling any kinds of good on the internet through a service such as Alibaba, Aliexpress and E-bay are extremely similar to the perfect competition. For instance, it is becoming more and more popular to use the above mentioned online magazines to compare prices of any types of product and buy cheaper ones. Like perfect competition online magazines namely Alibaba, Aliexpress and E-bay rely on the following elements:
• There also a large number of sellers.
• Perfect information and knowledge. It is easy to compare the prices of goods.
• There are no significant barriers to entry and to exit to the market.
Monopolistic competition is a type of market structure consisting of many small companies that produce differentiated products and free entry into the market and exit from the market. The products of these firms are close, but not completely interchangeable, it means that there is a difference in price, features, branding, and marketing.
By differentiating the product, the monopolistic competitor reduces price elasticity. Raising the price, the monopolistic competitor is not deprived of all consumers, as it happens in the conditions of perfect competition. The market is somewhat narrowed, but there remain those who steadily prefer the products of only this manufacturer. Monopolistic competition relies on the following elements:
• availability of many sellers and buyers (the market consists of a large number of independent firms and buyers);
• free access to and exit from the market (no barriers that keep new firms from entering the market leaving the market);
• Differentiated, differentiated products offered by competing firms. Moreover, products may differ from one another in one or a number of properties(for example, in chemical composition);
• perfect awareness of sellers and buyers about market conditions;
• influence on the price level, but in a rather narrow framework
Example of monopolistic competition: One of the most convenient examples of the monopolistic competition is washing powder.
There are quite a few different companies in Poland such as Ariel, Tide, Ares, Perwoll, Lenor, Vizir, Perlux, Maxi that, FF, Persil, Look, Surf, BioPower,Origami and so forth. Asa result, for the production of new varieties of detergent powders it is not required to create a large enterprise. Therefore, if firms producing powders will receive large economic profits, this will lead to the inflow of new firms into the industry. New firms will offer consumers washing powder of new brands, sometimes not much different from those already produced (in a new package, another color or designed for washing different types of fabrics).
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