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Economics
The study includes an analysis of market structures. The paper discusses the market type which Amazon operates in and the effects on their business of the market structure. Amazon is operating in an oligopoly market structure which is discussed in the study.
The role that the market plays in an economy is a crucial aspect of how businesses make their strategies and perform. There are different kinds of market structures; there are competitive markets, oligopolies and monopolies. In a competitive market the market has many sellers and buyers who are trading the same products which make the each seller and buyer a price taker. In such competitive markets each seller and buyer has to accept the predetermined price of the good. The cost is determined by the willingness of the buyers to pay for a product and the seller to sell the product. Another significant characteristic of a competitive market is that it allows the new entrants to enter and the players to exit the market at their will without any restrictions placed by some governing authority. The firm competency is relied upon the prices that they charge for the product should be equivalent against the marginal cost, or slightly close to the equilibrium. The market remains competitive by the fluctuating prices of products and services.
One of the most common business structures is a Monopolistic Market. If the product does not have a close...
When only a single product is made or traded, the competitors in order to attract new customers will begin to decrease their prices; in the monopolistic market the monopolies will set the prices. The two structures of the market which are monopolistic and competitive are of contrasting nature. The competitive markets set the buying and spending limits to create a better environment for businesses and economy.
The market structure that Amazon is operating in is the oligopoly. The consumers are given lots of choices in the oligopoly market and they can choose between the companies as they select the best possible offer for them which suit them. The customers also will have a say regarding which companies to choose and the reasons behind their selection which gives rise to the concept of corporate social responsibility. There are some instances when the companies form a pool of major players which is known as a cartel and then they all collaborate to decide the prices and then the consumers are left with no option they have to buy the product at that price or do not buy the product from anywhere. Oligopoly markets are somewhat similar to the monopolistic markets due to their abilities to change the price levels according to the consumers of the market.
If Amazon had operated in the monopolistic market is they will…
References:
Blinder, Alan S; William J. Baume and Colton L. Gale (June 2001), Microeconomics: Principles and Policy. Thomson South-Western. p. 212.
Perloff, J. Microeconomics Theory & Applications with Calculus. Page 445. Pearson 2008.
Rodman, George. Mass Media in a Changing World. New York (2nd ed.), McGraw Hill, 2008
Robert Spector (2000). amazon.com - Get Big Fast: Inside the Revolutionary Business Model That Changed the World. Harper Collins Publishers.
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