Monopolistic Competition Of The Retail Industry : A Look At Fast Food

The following case study is in regards of economic market structure. In the world of economics all businesses or companies rather, are categorized in certain market structures such as monopoly, oligopoly, or perfect competition, for instance, the market structure for restaurants. Most restaurants are considered monopolistic competition. Being that they all sell and serve food. They have to have instances that vary such as price, logos, servers, locations, décor, types of food, and hospitality.

Rivalry among existing competitors describes the intensity of competition between “Broadway’s Café” and existing coffee shops in an industry. A highly competitive industry might result from many players of about the same size, on single dominant competitor, little differentiation between competitors’ products and services

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.

A. perfect competition and monopolistic competition B. duopoly and imperfect competition C. duopoly and triopoly D. monopolistic competition and oligopoly

There are four types of market structures: Monopolistic Competition, Monopoly, Oligopoly, and Perfect Competition. Monopolistic Competition is also known as competitive market. In this market structure, there are a large number of firms that produce similar but somewhat differentiated products for the same target customers. The market share is also divided among large number of firms making it difficult for one firm to become the market leader. On the other hand, Monopoly is a type of market structure in which only one firm controls the whole industry. There are strict barriers to entry for new firms due to governmental restrictions or the monopolistic power of the firm itself. In Oligopoly, the whole industry is dominated by a few large scale firms that set prices, introduce innovative products, and use heavy campaigns to attract buyers. All other small scale firms follow the changing market patterns set by these oligopolistic firms. Lastly, perfect competition is a market structure in which there are a larger number of firms that produce similar as well as differentiated products for

1. Analyze the fast food industry from the point of view of perfect competition. Include the concepts of elasticity, utility, costs, and market structure to explain the prices charged by fast food retailers.

Potential entry of new competitors is rendered low for the grocery retailing industry. Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are amongst the top key players in the game. The entry of new competitors could be very low because of the huge capitalization funds that this industry requires. In addition, the industry has been long time dominated by the giant players that had already well established and positioned their brands throughout the country and that they had already spread out with branches in Metro Manila and other regions.

In the short run the perfect competition equilibrium can be found by graphing the marginal cost (MC), average total cost (ATC) and marginal revenue (MR) curves. In perfect competition the price is equal to the average revenue, which is equal to the marginal revenue and these are all constant, giving an infinitely elastic demand curve for the firm. The demand curve is “perfectly price elastic” due to the homogeneity of the products supplied, where each supplier, as a price taker, must focus on a single price. Given this, the only choice a supplier has in the short run is how much to produce. For profit maximisation to occur marginal costs (supply curve) must equal marginal revenue (demand curve). Profit maximisation is assumed to mean the maximisation of normal economic profit (i.e. revenue that covers the

In this scenario, the Tapese people of the island of Tap are being exposed to two market structures, perfect competition and a monopoly. A perfectly competitive market is a hypothetical market where competition is at its greatest possible level and some key characteristics of a perfectly competitive market are, many buyers and sellers, a homogeneous product, which is one that cannot be distinguished from competing products from different suppliers. In other words, the product has essentially the same physical characteristics and quality as similar products from other suppliers. Furthermore, a perfectly competitive market has perfect information, they are price takers, and there are no barriers to entry. With perfect information in a market,

Perfect competition is one degree of competition that a company and its competitor may try and compete in because it is considered relatively small in the private enterprise sector of a business. There are conditions that must be met in order for perfect competition to happen they are: all firms in the industry must be small, and the number of firms in the industry must be large.

Perfect competition referred as “pure competition,” it’s a type of market structure where there are many buyers and sellers. As a result, if the price of the good or the service is too high or the quality did not meet their expectation, they would have many substitutes. Fontinelle stated that this kind of market structure has to meet 5 criteria; sell similar products making the consumer has more choices, product price could not be controlled by the companies, have small market share, each company would provide information about the product that they are selling and the price that is going to be charged for the buyers, and freedom of entry and exit should be the characterization of the industry (Fontinelle).

•Monopolistic competition- When an industry contains many rival firms, each of which has a comparable but at least slightly different product. Restaurants, are an example, all serve food but of different types of food and in different sites. Manufacture costs are above what could be attained if firms sold equal products, but consumers have an advantage from the variety.

Within these categories, many sub-markets branch out. Competitive Markers are the most common, having many sellers providing similar products to many buyers. Competitive businesses make profit based off of the relationship between net and gross income, and depend on providing a more reasonable price than its competitor. This type of market is seen mainly with a capitalist economy. Monopolistic Markets are similar to Competitive, but they differ in the type of product. Monopolistic businesses provide differing items that all provide a common service. A Monopolistic business gains profit by providing a product that the same basic service as another business, but differs in small details that contour to different types of buyers. The auto industry, proving scooters, motorcycles, automobiles, and other forms of differing transportation is an example.

Perfect competition: in this competition, no participant dominates the market thus; no specific seller has the power to set the prices of homogeneous goods. This therefore makes the conditions of a perfect competitive market stricter than the rest of the market structures. In this market, AT&T should be willing to sell their services in a certain price that reciprocates to their demand to maximize profits.

1. Analyze the fast food industry from the point of view of perfect competition. Include the concepts of elasticity, utility, costs, and market structure to explain the prices charged by fast food retailers.