¶ … Market Structures:
Market structure is described as the institutional or organizational attributes and characteristics of a market. In most cases, the market structures mainly focus on the characteristics that impact the nature of pricing and competition through it's not important to major simply on the market share of the existing companies in a particular industry. Some of the most common market features include the number of companies, the nature of costs, market share of the largest companies, the vertical integration of the industry, product differentiation, customers' turnover, and the structures of buyers within the industry. Markets are usually divided or classified based on the composition of business and what it offers to the specific market. In contrast, the composition of the business is determined by the structure of market characteristics, which helps in determining the area and level of competition. The structured variables or characteristics are categorized as perfectly competitive, monopolistically competitive, oligopolies, and monopolies.
Defining the Structure of a Market:
The structure of a market is defined through an analysis of various factors such as the number of companies in the market, the potential or barriers to entry of new firms, and the inter-dependence of firms in determining pricing of products and/or services and output to improve profits. Therefore, the characteristics of a market that are essential in determining or defining the market structure include type of product, pricing, profit maximization, short-run or long-run profit, innovative behavior, and barriers to entry (Riley, 2006).
Notably, in order to understand market structures, it's important to comprehend the impact of public and private goods, monopolies, and common resources on supply and demand. This is primarily because the structures have direct effects on how labor market equilibrium is developed and established. In the modern business environment, there are various organizations or companies that show a market structure that have direct or indirect effects on labor, supply, and demand.
Four Market Structures:
perfection competition, monopoly, monopolistic competition, and oligopoly. While perfection competition tends to be rare in the real world, it's characterized by homogenous or standardized products, many firms, free entry and exit, and the tendency of firms to be price takers. Since perfect competition market structure is characterized by high competition, the demand for services is low. As a result, the supply of the product or service requires the firm to spend more in enhancing product quality and the quality of its service in order to maintain and increase demand. On the contrary, the monopoly market structure exists when a single company is the sole producer of a product that has no close substitutes. The main characteristics of a monopoly market structure include the presence of a single/dominant seller with which the firm and the industry are synonymous, unique products due to the absence of close substitutes, the single firm being the price maker, and limited entry or exit.
The monopolistic competition market structure is a market situation with a seemingly huge number of sellers who provide similar but not identical products ("Four Market Structures," n.d.). Some of the major industries or firms with the monopolistic competition market structure are clothing stores and the fast food restaurants. The main characteristics of this market structure include the presence of many firms, differentiated products, and easy entry or exit. In contrast, oligopoly exists in markets with few large firms that produce differentiated or homogeneous product that dominate a market. The main characteristics of oligopoly are standardized or differentiated products, few large firms, and high barrier of entry.
Differentiating between Market Structures in Wal-Mart:
Wal-Mart Stores, Inc. is one of the examples of a specific company that shows the characteristics from various different market structures. This is mainly because Wal-Mart displays the characteristics from several market structures throughout its operations. Since its introduction Wal-Mart Stores, Inc. has…
