Microeconomics The ServiceMaster Company is concerned with the provision of a wide range of services to not only residential but commercial customers as well. Mainly, its services include but are not limited to facility management services, commercial cleaning as well as restoration services. In this text, I describe the type of market ServiceMaster operates in as well as the competition the company faces; if any. I also make submissions on how I think the company can increase its market power.

The Type of Market in Which ServiceMaster Operates

ServiceMaster operates in a monopolistically competitive marketplace based on a careful examination of the specific characteristics of the company as well as the marketplace it operates in. Rittenberg & Tregarthen (2009) define monopolistic competition as a situation where we have a large number of firms producing products which are similar but which are in one way or the other differentiated. Further, they note that in a monopolistic competition, there is ease of exit from the market or entry into the market. This is in contrast to imperfect competition where...

Hence in that regard, ServiceMaster can still set its own prices as some people will continue to seek its services based on the fact that these services are differentiated. In this market, there are also no barriers of entry and companies can exit the market with relative ease. Further, unlike in a monopoly, there is no restricted raw materials ownership in the case of ServiceMaster. In a monopoly it is the ownership of inputs as well as raw materials that gives firms monopoly power (Rittenberg & Tregarthen, 2009). Further analysis of the market ServiceMaster operates in reveals that there is a significant ease of decision making in this case and each firm does not act in fear of increased competition. This is unlike an oligopoly. We can hence say that in this case, the various firms (which I name elsewhere in this text) individually possess a certain level of…