Market Structures – Industry Infrastructure

Industry infrastructure is one that comprises numerous small sellers and buyers. Firms that comprise the Industry produce similar products and consumers have complete and accurate Information about their prices. All firms have equal access to raw materials, capital, labor and technology. A perfectly competitive industry, therefore, has no single market leader or monopolistic firm. All participating companies are identically leveraged and each must offer high quality products to retain customers.

Examples of perfectly competitive industries include those that offer agricultural products, such as livestock, corn and wheat.

Pure Monopoly A pure monopoly industry infrastructure comprises a single producer or supplier of a product or a service that has no close substitutes. The single industry player controls all resources and technology and blocks potential competitors from entering the industry. Monopolies are public or private. Public monopolies serve the general public and their primary goal is not profit minimization.

Examples of public monopolies Include local telephone companies and water companies.

Private monopolies are large, private companies, typically multinationals, which have profit exaltation as their primary goal. Monopolistic Competition A monopolistic competition pertains to an Industry Infrastructure that has characteristics of competition and monopoly. The industry comprises many films, which offer substitute products, and many buyers.

Although the products are substitutes, they are differentiated on the basis of physical attributes, image, advertisements and accompanying services. For example, Domino’s and Pizza Hut offer pizza but they are differentiated on the basis of ingredients, recipes and taste. Companies within the industry can gain monopoly over their competitors by offering period products or better service.

A monopoly lacks any competition either within the market or within a specific industry.

Monopolies are defined by a single business, operating without competition in the market. The mall barrier to entry Into monopolistic markets Is that one firm holds all of the market share and no market share Is available for other businesses to succeed. A monopoly may be formed If a company owns all of one single resource, holds the patent for making a specific type of product or if the government has disallowed any other business from competing in he marketplace. Since the early 20th century, however, the U.S. Government has outlawed the creation of monopolies. Oligopoly Oligopoly is an industry infrastructure that is dominated by a limited number of firms that function independently of each other. The two varieties of oligopoly are undifferentiated and differentiated. Undifferentiated oligopoly refers to companies that sell the same product or commodity, such as a barrel of oil or an ounce of gold. Differentiated oligopoly is when different companies sell the same products but with differentiated features.

For example, automobile Depending on the product, many Industries tend towards oligopoly, where a Limited number of companies compete for consumer purchases. The quality of the product from one business to another may be differentiated or the products may be identical. Industries that persist with oligopolies competition tend aircraft manufacturers. The barriers to entry in the aircraft industry are regulatory and financial. The cost for producing a single Jet is prohibitively expensive for most manufactures and therefore not worth the competition, even if the competition is limited.

A purely competitive market is a theoretical state in which no single buyer or seller has influence over the products sold in the market. Any seller enters the market to sell any product, and buyers are free to purchase any product desired. A large number of producers and sellers operate in the purely competitive market, and the products sold by one producer are easily replaced by a similar product from another producer. Prices for goods would be established by the rate the majority of consumers are willing to pay, and producers would adjust productivity to match the going price.

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