Market Model Pattern of Change

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Market Model Pattern of Change: Automobile Industry Presented By Name Institution Instructor Course Title Date of Submission Abstract Automobile industry is one of the oligopolistic industries that have experienced a change in its oligopoly market model. The pattern of change is evidently shown in its production, supply chain, pricing, and international trade changes. The paper examines this industry and explains the pattern of change and other aspects within the industry. Industry description Automobile industry is one of the most global oligopolistic industries. Products in this industry have spread throughout the globe, and a few numbers of companies with worldwide recognition have dominated it.…show more content…
Currently, major players through imposition of high impotration barriers have introduced protectionism, thus making liberalization and protectionism to influence the trade. Hypothesis of the basic short-run and long- run behaviors of the automobile oligopoly model In most countries, automobile industry has oligopolistic market structure and major players have been competing for larger market share with considerable amount of diversified products. Since the market model is currently changing, a few short-run and long-run behaviors will be seen. Due to competition, most major players and new entrants will obtain nil normal profit in the long-run. However, in the short-run, they will earn super-normal profits. Therefore, competition will be intense in the short-run especially when product life cycle becomes shorter. In addition, the scenery of competition will remain oligopolistic within every segment in short-run as the figure of models in each segment get limited during years of model (Nag, Banerjee & Chatterjee, 2007). Areas that can lead to transaction costs in automobile industry Transaction costs are the costs incurred when making economic exchanges or simply the costs of market participation. In the automobile industry, three possible areas can lead to transaction costs. They include vertical integration, supplier switching costs, and post contractual bargaining and opportunism (Monteverde & Teece, 2007).
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