Monopolies, Oligopoly, Monopolistic Competition, And Perfect Competition

Oligopolistic markets, such as supermarkets or car manufacturing, can be defined in terms of market structure or in terms of market conduct.

1) An Oligopolistic market structure is a structure where very few large businesses sell a particular standard Good or differentiated Good, and to whose market entry proves difficult. This in turn, gives little control over product pricing because of mutual interdependence (with the exception of collusion among businesses) creating a non-price competition meaning they are the ‘price setters’. A good rule to help classify an

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

There are many models of market structure in the field of economics. They include perfect competition on one end, monopoly on the other end, and competitive monopoly and oligopoly somewhere in the middle. In this paper, we will focus on the oligopoly structure because it is one of the strongest influences in the United States market. Although oligopolies can also be global, we will focus strictly on the United States here. We will define oligopoly, give key characteristics important to the oligopoly structure, explain why oligopolies form, then give an example of an oligopoly in today’s economy. Finally, we will discuss the benefits and costs in this type of market structure.

Name two different market structures. Describe how and why they each have a different competitive situation.

In the field of microeconomics, the market structure of an organization determines the performance of the organization within the industry. There are different types of market structures practiced today. Among these market structures include the perfect competition structure (Miller, Vandome, & McBrewster, 2009). In perfect competition structure, the competition happens between numerous small firms against each other. In this practice, there is optimum production by the firms socially at the minimum cost per unit possible. There is no barrier to entry in this structure, hence new companies and organizations can join easily. The

The fear of the same monopolistic effect has increased due to the media’s recent reports that announced AT&T’s plans to acquire T-Mobile. AT&T publicly revealed on March 27 that it had agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion (Sorkin, 2011). AT&T currently ranks second in the industry, with Verizon falling in first, T-Mobile in third, and Sprint in fourth. Considered as one of the largest telecom mergers, the deal would leave Verizon and Sprint lagging behind based on the number of subscribers, pushing the companies into lower ranking positions within the market. Currently, AT&T and Verizon account for a large percentage of the market, but it is possible that soon AT&T will advantageously gain a subscriber base twice that of Verizon. It is likely that AT&T would gain 130 million subscribers from merging with T-Mobile (“AT&T and T-Mobile”, 2011). Purchasing T-Mobile and gaining a large subscriber base would be unethical on AT&T’s behalf because the company’s size could stifle innovation and competition within the telecommunications market, something that antitrust laws do not condone. This is bad news for consumers who would be faced to deal with the after effects of the merger, such as fewer telecom choices, higher prices, and lower quality products to fit their mobile wireless needs. The approval of this

The organization and characteristics of a specific market where a company operates is referred to as market structure. While markets can basically be classified by their degree of competitiveness and pricing, there are four types of markets i.e. perfect competition, monopolistic competition, monopoly, and oligopoly. In perfect competition markets, many firms are price takers whereas monopolistic competition markets are characterized by the ability of some firms to have market power. In contrast, oligopoly markets are those in which few firms can be price makers while monopoly market is where one firm can be a price maker.

Yes, the AT&T company is a near monopoly conditions that exist many public utilities. It is impossible for other firms to overcome barriers to entry such as legalizing, franchising, patent, and licensing. The near-monopoly allow AT&T to earn profits and keep their customer by increasing prices to the highest regulated price (Sexton, 2012, p. 354 - 366).

In differentiating between market structures one has to compare and contrast public goods, private goods, common resources, and natural monopolies. All of these are major factors that need to be considered.

What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market.” Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers.

 As a consequence of the governments intervention, the AT&T lawsuit settlement, as well as the shift in the telecommunication industry, it was clear that AT&Ts local telecommunication business was slowly moving away from a monopoly franchise environment. It was moving towards a more competitive environment characterized with more consumer choice and greater competition. Companies such as IBM saw the divestiture of AT&T as an opportunity to provide new telecommunication equipment and services, which would allow them to gain a higher market share. AT&T's stock had up till then been regarded as a stable utility-type stock because of its steady growth and consistent dividend yield. However, AT&T should have kept in mind that they would not have as much market control in the future as they did prior the divestiture, much due to the intensifying competition and regulatory environment changes.

Oligopolistic Markets are less common, but still prevail in the modern economy. An Oligopolistic business is one with few competitors, basing its revenue off of “outsmarting” its opponents by analyzing their decisions and predicting the outcome. Having an analysis of an opponent provides the basis for Oligopoly, as income is based on providing a product that has more features than another product, released to the public around the same time. The Cellular industry provides a pristine example of the Oligopolistic Market.

In this market, AT&T may be forced to use restrictive trade practices to increase their services prices and restrict their production (Sjögren and Vifell, 2014). The organization may also in many instances collide with other organizations in the same industry in an attempt to stabilize an unstable market.

AT&T was broken up into the Bell companies in “1974 by the U.S. Department of Justice antitrust suit against the monopoly” (From Wikipedia, the free encyclopedia). Today AT&T has become a competitor vying for control of the telecommunications industry. “In monopolistic competition, there are many firms vying for control of one market. Each firm offers a different type of product, as opposed to perfect competition in which all offer the same product. Each firm, then, has a monopoly in the market of their own product”(Oracle ThinkQuest Education Foundation) AT&T in 1988 began purchasing stock in Sun Microsystems to begin its diversity in product services. Throughout the 90s AT&T continued purchasing more computer companies and cell phone companies to gain market share in the growing telecommunication industry (CyberStreet). Good pricing structures align with costs. AT&T Wireless realized that the marginal cost of a cellular minute was small compared to the cost of acquiring and maintaining customers. Their switch to a flat fee “One-Rate” plan was a huge success, stealing heavy users away from the competition. Prices increased for light users and many became hooked on the cellular lifestyle (Lake Partners Strategy Consultants, Inc. [LPSCI], 2001-2004). AT&T has seen that the ability to change quickly in the ever-evolving telecommunications market will help in gain market share. Its ability to see the value in keeping customers rather