Analysis of Market Structures and Pricing Strategies Essay

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Analysis of Market Structures and Pricing Strategies

The markets today are so complex and deal with so many variables it can be difficult to understand just exactly how they operate. In the following I will reveal the different kinds of market structures along with their different pricing strategies. Relating to these topics, I will focus on the importance of cost, competition and customer. 1. Analysis of different market Structures Different market structures are basically compared by the number of competing firms and the extent of entry barriers. a) A perfect competition structure has zero entry barriers with a lot of firms. This means it has a large number of competitors, with
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Again, with high entry barriers they are not bombarded with other firms coming and going from their market. (Samuelson and Marks, 2010). 2. Analysis of pricing strategies specifically related to each type of market structures a) In a perfect competitive market, the sole determinant of pricing is the market demand and the supply curves. A demand curve refers to the total amount that consumers will pay for their products. The supply curve is the total amount that the producers can actually make to supply to the company at the price they can afford or are willing to pay. Another factor in a perfect competitive market structure is the equilibrium price which is basically when the supply of the market meets the market demand of the consumers. Anther unique feature of a perfect competition market is that it is a price taker. In essence, this means that the company doesn’t have any influence on the price. Again, this can only be caused through a market that has a large number of firms with identical products. (Samuelson and Marks, 2010). b) In a monopolistic competition structure, although there are numerous firms, they carry different products. Due to product differentiation, each company is able to somewhat control their own pricing. c) In an oligopoly structured market, pricing seems to be a bit more complicated. The reason for this complication lies in
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