Submitted market specificity – the production of various goods,

Submitted to

 

 

Submitted by

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

42206(single diploma) – Amal Yusupov

Table of content

Each branch has its own market
specificity – the production of various goods, a different industry of
producers, the size of enterprises, the features of technology, the composition
and specificity of buyers, the specifics of competition.

In microeconomics, the most
typical market structures 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 important 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 competition
strategy.

There are four main market structures: perfect competition, monopolistic
competition, oligopoly and monopoly.

Perfect competition indicates a
market structure, in which a plenty number of small companies compete against
each other. Moreover, firms do not have a significant impact on power of market.
Consequently, the manufacture generally produces the absolute l level of
production, which in turn lead to market has many buyers and producers trading identical
products so that each buyer and seller is a price taker.

Perfect competition relies on
the following elements:

·       
All small firms are focused to maximize profits.

·       
The goods which offered by the different sellers are largely the typical.

·       
There are not specific preferences between different sellers. It does
not matter for the customer from which firms buy the products.

·       
All firms have free access and exit to the market.

·       
There is perfect information and knowledge about homogenous products.

At present, according to Nelson
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 demonstrates 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.

     Example 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 is extremely similar to 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 relies 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 to 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, varied 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 example for 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 trat, FF, Persil, Losk, Surf, Bio Power,
Origami and so forth. As
a 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.

 

The market of oligopoly is
characterized by the presence on the market of a minimal number of large
sellers, whose goods can be either homogeneous or differentiated. The entrance
to the oligopolistic market is extremely difficult, the entrance barriers are
very high. Control of individual companies over prices is limited. Examples of
oligopoly can serve the automotive market, cellular communication markets,
household appliances, metals. The peculiarity of the oligopoly is that the
decisions of the companies about the prices for the goods and the volumes of
its supply are interdependent. The situation on the market depends heavily on
how companies react when the price of a product changes with one of the market
participants. Two types of reaction are possible: the first is reaction ,when
other oligopolists agree with the new price and set prices for their goods at
the same level (follow the initiator of the price change);the second ignoring
reaction – other oligopolists ignore the price change by the initiating firm
and maintain the previous level of prices for their products. Thus, for the
oligopoly market, a broken demand curve is characteristic.

 Features and conditions of oligopoly:

·       
the number of sellers in the industry: small;

·       
size of firms: large;

·       
number of customers: large;

·       
goods: homogeneous or differentiated;

·       
control over the price: significant;

·       
access to market information: difficult;

·       
barriers to entry into the industry: high;

·       
methods of competition: non-price competition, very limited price.

Cellular services today are the most profitable and
rapidly growing segment of the telecommunications market in Russia. A small
number of sellers dominate the Russian cellular market, which is one of the
most obvious example for oligopoly. The leading players here are MTS, Megafon,
Beeline, Tele2. A feature of the Russian cellular market is that it is
characterized by a high level of competition. MTS successfully relies on the
price leadership strategy; Megaphone applies the strategy of minimum prices for
services; Beeline relies on a pricing strategy based on individual costs; Tele2
provides the widest range of tariff plans at low prices.