Differentiating Between Market Structures Of Wal Mart

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Differentiating between market structures
The structure of a market is defined by the number of firms in the market, the existence or otherwise of barriers to entry of new firms, and the interdependence among firms in determining pricing and output to maximize profits. Retail sales are indicators of microeconomic conditions presented in a given area at a particular place in time. Since Sam Walton opened his first Wal-Mart store, Wal-Mart has been making ripples throughout the micro economies of America. Wal-Mart’s market structure is typical of most of our nation’s largest corporations in that they are an oligopoly (Brown, 2010). According to Colander (2010), “An oligopoly is a market structure in which there are only a few firms and
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Sticky prices are the result of an informal collusion behavior and correlates to a kinked demand curve as one reason firms do not lower their prices to outsell their competition. Any increase or decrease in price will be met by their competition, causing the less elastic portion of the demand curve and its corresponding marginal revenue curve to cause a kink in the demand curve. This kink causes the marginal revenue curve to have a gap and is resultant from the theory of sticky prices (Colander, 2010). Wal-Mart would be considered a monopolistic structure in the retail market. Wal-Mart is very aggressive in beating out the smaller competition and in advertising efforts. With Wal-Mart offering such low prices it makes it hard for other retailers to compete and hinders sales drastically for smaller companies. Wal-Mart was quoted to be a monopolistic beast and strong opinions about the organization are everywhere (Bloomberg, 2013).

There are different classifications of markets and the structure of a business determines which classification it will fall into. Markets are divided according to the composition of the business and what it provides to the specific market. Business composition is determined by the structure of market characteristics, and this helps determine level and area of competition. The characteristics in a market with the most concentration focus on number of purchasers and retailers, level in which a product has a substitute, price,
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