Differentiating Between Market Structures Essay

1105 Words Oct 17th, 2012 5 Pages
Differentiating Between Market Structures
ECO/365 Principles of Microeconomics
August 30, 2012

Differentiating Between Market Structures
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 these firms explicitly take other firms’ likely response into account when making decisions.” Furthermore, given that
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The company’s balance sheet shows that their international expansion has been the key to producing profits during the tough economic conditions of the previous several years. Many countries have a lower cost of living than Wal-Mart is accustomed to operating in and the decreased salaries and operating expenses overseas would serve to boost sales while increasing revenues.
Wal-Mart can further maximize its profits in the long run through data mining product sales in order to establish market share for each retail location. This data would then be used to set-up the display of products for sale in a location and manner that would increase the volume of items sold. This strategy would cost Wal-Mart some time and money in the short run; however it would generate more sales in the long run and increase customer satisfaction in the short run. Both lead to an increase in sales and therefore maximize profits.
Wal-Mart has another strategy available that can assist in maximizing revenue. That strategy involves the equilibrium of the labor market in all of the locales in which they operate. Changing where the labor market equilibrium intercepts requires adjustments to the supply of labor and demand of labor. Market equilibrium cannot exist without either supply or demand and should Wal-Mart take advantage of changing the variables by closing certain retail