Characteristics Of Pure Competition

1. 0 Introduction

Basic microeconomic theory areas that companies should seek to increase profits and that is achieved where marginal revenue is add up to marginal cost. A number of assumptions underpin this theory, including the assumptions that organizations clearly understand the nature of the demand for his or her products, and just why people buy, and that they are prepared and able to control creation and sales as the model needs. In reality, decision makers don't have perfect knowledge and creation and sales are afflicted by suppliers and distributors.

However, this basic theory has resulted in the introduction of market models and characteristics of these according of barriers to entry into the industry, the amount of firms in the industry, whether those organizations produce a standardized product or make an effort to differentiate their products from those of other company. At the first 1920's, only two specific market models are present in the monetary studies which are Pure Competition and Pure Monopoly. However, economist discovered that most businesses operate in market segments that fall between the extremes of 100 % pure competition and real monopoly. These companies do not face competition from numerous rival suppliers all selling a homogeneous product at an individual price. Instead, most businesses in the true commercial world face varying levels of competition. In some cases, there are tournaments offering more or less equivalent products; in other cases, organizations produce and sell differentiated products. In the latter case, a competitor's product is merely an attractive alternative.

In the real commercial world, there could be numerous competitor, or there could be just a few other vendors in a given market. The necessity of for a more exact world for marketplaces of this form of this type led to the development of 'imperfect market' to refer to such markets. Imperfect competition refers to markets lying among both extreme types of markets, real competition and genuine monopoly.

In order to bridge the gap of these extreme types of market composition, two economists, Joan Robinson of Cambridge College or university of England and Edward Chamberlin of Harvard University in the U. S. A. , presented independently one third market world to describe and illustrate the idea of imperfect competition in the entire year of 1993. Quite simply, their model of market organization is what as refer as monopolistic competition.

As due to the variations between the markets present, four different market constructions are released: Pure Competition, Pure Monopoly, Monopolistic competition, and Oligopoly.

Table 1. 01 shows the partnership between the 4 market models.

Pure Competiton

Pure Competition is a rarity as such as a theoretical market model. Pure competition involves a very large number of firms creating a standardized, non differentiated product that is strictly identical to that of other businesses as flawlessly competitive. Pure Competition is market which firms is only going to make 'normal' income, the amount required for them to stay in the industry. In Pure Competition market there are no major obstacles to entry into the industry so new businesses can enter in or leave the industry quickly. If a Pure Competition market grows to a predicament which supply surpasses demand then the ruling selling price is compelled down and only the efficient firms survive.

Monopolistic competition

Monopolistic competition is characterized by a relatively large number of retailers producing differentiated products such as clothing, furniture and catalogs. However, as there are once more no major barriers to entry the above situation concerning earnings applies in terms of long run. Newcomers increase resource and even though those organizations with distinctive products may charge some premium they will still have to go consistent with market prices generally, which made the purchase price takers. This will have a dampening effect on profits the firms gained.

Monopoly

Pure monopoly is market structure where one organization is the sole seller of something or service. Only a tiny amount or even one large firm is prominent and constitutes the whole industry. Pure monopoly is a real chance for 'supernatural' profits, more than what is required to stay static in business since the accessibility of additional companies is clogged or the hurdle is high to entry. Monopolist produces a unique product that the businesses make no effort to identify its product. Only in monopoly, excess profits could be made if government did not act as a restraint but under normal circumstances their activities in conditions of source and costs are watched and controlled.

Oligopoly

Oligopoly requires only a tiny amount of large firms of the same or similar product. This example resulted in each of the firms have a tendency to be wary of each other as rivals and the prices are held back again to some degree for a fear of losing the market share. Organizations are interdependent and dread a price lower will be met by competition and price increases will not. A couple of two types of oligopoly, depending on whether opportunities exist for significant differentiation. In all of these models competition is a major determinant of revenue potential and for that reason targets must be arranged with competitors in mind.

The firms that people have chosen because of this assignment are

1. Tesco

2. Astro

3. Kaspersky Lab

4. Weng Yeang Hang Malaysia

5. Nescafe

6. Carlsberg

7. Cavenzi

8. Air Asia

9. Coca-cola

10. Indah Water consortium Bhd

11. Maxis

12. Face To Face

13. Petronas Gas

14. GSCinemas

15. Brand's Outlet

16. Nike

17. Casio

18. Tenaga Country wide Bhd

19. Logitech

20. Telekom Malaysia Bhd

2. 0 Pure Competition

Characteristics of Pure Competition

There are few characteristic of genuine competition. One of the characteristic is large numbers of small vendors in the forex market. Therefore, the action of any single seller does not have a significant influence on other sellers on the market. Also, the assumption is that many buyers and resources (particularly capital) can certainly be moved into and from the industry. Secondly, there is no product differentiation in clean competition principle. All solid sell identical products. In other words, all products are completely standardized product in this idea. You'll find so many firms in natural competition; each is so small an integral part of the market that this cannot alter the marketplace price by providing a little more or little less of its output. Thirdly, real competition has been used to make reference to markets where businesses are price takers historically. Any organization in market will be price takers accordance to four conditions; 1. All of firm on the market are producing the same produce; 2. There a huge number of firms exist on the market; 3. Each organization supplies only an extremely small portion of the total amount supplied to the market; 4. No obstacles limit in the entrance or exit in the market.

Weng Yeang Hang Malaysia Sdn Bhd

Products

Weng Yeang Hang Malaysia Sdn Bhd provides agricultural goods and foods.

Justification

After I examined market style of pure competition, I have realized 100 % pure competition is relatively uncommon in real life market; the forex market model is highly relevant. I founded that Weng Yeong Hang Malaysia Sdn Bhd gets the attribute of the closest company to a pure competition market composition. Among the factors Wenf Yeong Hang Malaysia Sdn Bhd belonged to Pure Competition market is that there is a very large number of independently acting sellers who also sells agricultural goods and food product, often proposing their products in international market segments. The product given by this company is standardized or similar. If the price is the same, consumers will be unconcerned about which vendor to buy the product from. Besides that, new organizations can openly entry and existing businesses can openly leave simply competitive industries. Lastly, this company may is a price taker for this reason company exerts no major control over product price. Each organization produces such a minor part of total productivity that growing or diminishing its end result will not plainly influence total source or, therefore, produce price.

3. 0 Monopolistic Competition

Characteristics of Monopolistic Competition

One of the characteristic of Monopolistic Competition is that we now have many amounts of firms on the market producing and reselling a slightly but yet differentiated product in conditions of brand, quality, location, services and other factors. Organizations which operate under Monopolistic Competition as a rule have no control over the price of the product. In a Monopolistic Competition market, the obstacles to entry to industry are easy and non price competition with advertising, brands, trademarks etc to boost their respective ruling over the certain market. Many producers in Monopolistic Competition sell products that are differentiated in one another as goods nevertheless they are not perfect substitutes for that one product which is comparable to it.

Kaspersky Lab

Products

Kaspersky Lab's products for home and home office are specifically made software to provide hassle-free and quality safeguard against viruses, worms and other malicious programs, as well as hacker attacks, spam and spyware

Justification

Kaspersky Lab is considered as a firm operating in the monopolistic competition market composition because there are many businesses providing different types of antivirus software in Malaysia. From a approximately estimated statement on the internet about the numbers of antivirus software present in the current market, there are 10 to 15 antivirus software companies which are available antivirus software. Despite the fact that each one of these products shared the same purpose of defending against malwares, but there is still an component of differentiation in each one of the products itself. Kaspersky Lab is reselling many differentiated products which is said to be substitutable products but not correctly substitutable with antivirus organization by other opponents. For instance, customers will choose different brand of antivirus as they please. The antivirus industry is easy to entry and exit because the antivirus software that are easy to be substituted by another substitutes and the cost production are minimal compare to the products produced in the monopoly and oligopoly market buildings.

Nescafe

Products

Nescafe produces a combo of freeze-dried caffeine granules, beans and instant coffee all in a single powder.

Justification

Nescafe is recognized as a firm operating in the monopolistic competition market framework because there are many brand of firms is retailing instant caffeine powder in Malaysia like Electric power Main and Ah Huat White Espresso. Nescafe is providing a types of differentiated products which is stated to be substitutable products however, not correctly substitutable with coffee drink by other opponents. For cases, there are numerous brands of instant espresso powder with different presentation, ingredient of the merchandise and price. There are independent action means with numerous of espresso firms in an industry, and each organization can determine its own pricing insurance policy without considering the possible reactions of rival firms. Nescafe are no 'personal selling' because the product is of low unit value, nor have they own chain of shops.

Cavenzi

Products

Cavenzi is a company to market good deal and many kind of furniture

Justification

Cavenzi is considered operating in the monopolistic competition market structure because there are many make of firm also providing furniture in Malaysia. Cavenzi is advertising many differentiated products which is claimed to be substitutable products however, not perfectly substitutable with furniture by other competitors. For good examples, it got many brand of furniture just different bundle, design, component of product and price. A couple of Indie action means with numerous of furniture firm within an industry, and each firm can determine its own pricing insurance policy without considering the possible reactions of rival businesses.

Coca-cola Company

Products

Coca-Cola produces a variety of soft drinks and refreshment beverages.

Justification

Coca-cola Company is known as functioning in the monopolistic competition market framework because there are many soft drink supplier in Asia. Predicated on the existing Asia market, it is around estimated that there are 10 or more firms are selling carbonated drinks. Coca-cola is offering many differentiate products which is said to be respond to customer requirements. However, among all the soft drink, each of them may have some differentiated attributes to their product. For instance, the soft drinks are differentiated by different presentation or creative imagination advertising. There are some but within somewhat narrow limits due to the changes of price are no cause big effects with their consumer. Moreover, the condition of entry the marketplace those are relatively easy because the price tag on production give up lower and that can product many at same time. Coca-Cola Company substantial focus on advertising, brands trademarks as the creative advertising released by Coca-Cola Company serious attention to the public. Compare with another soda their different of style and ingredient to making price competition on the market.

Face To Face

Products

Face To Face provided noodle as its main product and there also received sell drinks, fried rice and snack foods as like restaurant.

Justification

Face TO HANDLE is considered working in the monopolistic competition market framework because there are many restaurant advertising in Asia. Simple fact TO HANDLE is selling differentiated products to be flawlessly substitutable with restaurants sold by other challengers. For example, if restaurant are full slot machine and customer has choice go to Face TO HANDLE and older food as their like. However, among all the restaurants, all of them may have some differentiated attributes with their product. For instance, restaurants have different packaging or some has delivery services. There may be some but within rather narrow limits due to the changes of price are no cause big effects with their consumer. Moreover, the health of entry the market those are relatively easy because the expense of production give up lower and that can product many at same time. IN PERSON have its pricing plan and it substantial focus on advertising, brand names trademarks as they are promote many economical food to appeal to their product from open public. It will consider price competition with other restaurant.

Brands Outlet

Products

Brands Outlet is one of your brand under Padini Holdings Bhd. They provide a variety of brands, styles and items for men, women and children. Another feature of Brands Wall socket is that the store layout is designed to make the shopping experience easy and fun.

Justification

Brands outlet regarded as market model of monopolistic competition because there have many other band tee on the market we know, so that it consider as relatively large number of sellers. Each of group tee stable own market stocks which have a relatively small ratio of the full total market and consequently has limited control over market price. They may be no collusion to each firm due to restrict output and collection prices are unlikely. Besides that, they always do advertising like graphic tee RM50/ 3 bits credited to product differentiation to do some control over price. The consumers can pay for it to satisfy their choices.

Nike

Products

Nike is well known by every teen or sporty person. We mostly understand this brand though to the activity shoes. In addition they developed some accessories for sport and tee.

Justification

Nike regarded as a market style of monopolistic competition anticipated to few factors. The first factor is that the Nike shoes industry (Nike's product mainly on sport shoes) has many rivals like Adidas and Puma which is retailing similar products. Nike has its unique design, quality of work to create a sense of differentiation in their products to be able to gain the upper hand in the industry. Nike retailing store often contend mainly on the basis of location. Locations that happen to be near consumers just like a busy road or shopping center. In additionally, they may advertise their produces that differs from rival's product with famous sports players.

Casio

Products

Casio produces projector, cash registers, label printing device and other product that advantage to businessman.

Justification

Casio considered as market model of monopolistic competition because each one of product that them advertising has a great deal of competitors. Like categorises of designer watches, the rival present are Rolex, Citizen, Seiko and Skagen. Casio has small market shares in each of company has a relatively small percentage of the total market and consequently has limited control over market. They have got its own independent action one another, with numerous businesses within an industry, there is absolutely no feeling of interdependence among them. Each of they can determine its pricing insurance policy without taking into consideration the possible reactions of rival organizations.

Logitech

Products

Logitech provide computer peripherals that are crucial to our laptop and desktop such as mouse, keyboard, loudspeaker and microphone.

Justification

Logitech regarded as market model of monopolistic competition because them have relatively large of number of sellers on the market. There is no collusion between Logitech to other computer peripheral's company. The existence of relatively large numbers of firms to restrict output and set in place prices us improbable. Logitech is offering a bunch of differentiated products to be perfectly substitutable with other computer peripherals sold by other opponents. For instance, if one of Logitech's mice sold-out, the consumers can also choice other Logitech's mice provided in the shop. However, among all the computer peripherals, all of them may have some differentiated attributes with their product. Different product packaging and performance should be expected on other computer peripherals. There may be some but within somewhat narrow limits because of the changes of price are no cause big effects with their consumer. Moreover, the health of entry the market those are not too difficult because the cost of production stop lower and that can product many at same time. Logitech's computer peripherals appreciable focus on advertising, brand names trademarks as they are promote many computer peripherals to entice their product from general public.

4. 0 Pure Monopoly

Characteristic of Monopoly

Monopoly has considerable market control. It controls the selling side of the marketplace. They need to pay the monopoly firm if anyone desires to receive the production sold by the monopoly company. This means that the demand curve facing the monopoly is the marketplace demand curve, they are really one and the same. There is merely one firm but not a whole lot of small firms in a monopolized industry because there are no close substitutes on the market. A monopoly often owes its monopoly status to the actual fact that other potential providers are avoided from entering the market. No liberty of accessibility here. Neither is there perfect information. A monopoly firm often has specialized information, such as patents or copyright which are not available to other potential producers.

The most significant aspect of being truly a single seller would be that the monopoly seller is the market. The marketplace demand for a good is the demand for the outcome produced by the monopoly. This makes monopoly a price maker, rather than a price taker. And of course, a Monopoly market structure must have a distinctive product without close substitutes to be the only retailer of a product. Hence, owner has full control over the marketplace price, and also you don't have to advertise for his goods.

ASTRO

Products

The Malaysian immediate broadcast satellite (DBS) Paid TV service. It transmits digital satellite television on pc, movie and radio to Malaysia & Brunei's homeowners. The name Astro is an acronym for All-Asian Satellite Television and Radio Operator. Since 2008, a video recording loading service to mobile phone users throughout the country (Astro Mobile Television set) has been offering by ASTRO and subsequently Astro B. yond Mobile.

Justification

ASTRO is considered as functioning in the natural monopoly market structure because there are only one range of organization which provide broadcast satellite Pay Television service in Malaysia. They control the market for pay Television set equipment and accessories. ASTRO has lone control over price. Besides, ASTRO is providing unique products which is claimed to be non substitutable by other firms' products. For instance: No other organizations give services like ASTRO have, so if costumers need to get the services from ASTRO, they just have to pay them. For ASTRO customers, it is only pay, pay and purchase everything from your day of unit installation and even when they decide for early termination. Late payment charges, reinstallation charges and servicing charges add on.

TENAGA NASIONAL BERHAD (TNB)

Products

TENAGE NASIONAL BERHAD (TNB), the sole company for electricity in Malaysia. TNB has a monopoly within the transmission and distribution of electricity in Peninsular Malaysia. TNB is in charge of electricity generation, transmission and syndication and retail resource in Peninsula Malaysia.

Justification

TENAGE NASIONAL BERHAD (TNB) is really as considered as operating in the pure monopoly market framework since it is really the only provider of electricity in Malaysia. TNB has a monopoly over the transmission and distribution of electricity in Peninsular Malaysia and it has lone control over the price. Besides, TNB is retailing unique products - electricity technology, transmission and syndication and retail source in Peninsula Malaysia which is claimed to be non-substitutable by other companies' products. For instance: TENAGA NASIONAL BERHAD (TNB) is the only firm which gives transmission and circulation of electricity in Peninsular Malaysia. To achieve the transmission and distribution of electricity from TNB, all the Malaysian must pay TNB for the individual electricity resource.

Telekom Malaysia Bhd (TM)

Products

The largest telecommunications provider in Malaysia that provides a comprehensive selection of communication services and alternatives in broadband, data and fixed-line.

Justification

Telekom Malaysia Bhd (TM) is really as considered operating in the real monopoly market framework because regarding to UK definition of monopoly, it says that any business retains more than 25% of the marketplace talk about is consider as monopoly and Telekom Malaysia Bhd (TM) is the most significant telecommunications professional in Malaysia which keeps more than 25% of the marketplace. Telekom has set up the fibre optic backbone in the westerm Malaysia, this allowed Telekom Malaysia to create a slighty hight than the normal price, combined with the government's consent, this made Telekom Malaysia Bhd (TM) a price maker instead when compared to a price taker.

Indah Water Konsortium Sdn Bhd

Products

Indah Normal water Konsortium Sdn Bhd, a national sewerage company, managed by Minister of Funding Incorporated, is accountable for providing sewerage services, working and maintaining over 5, 750 public sewage treatment vegetation and 13, 000km sites of sewerage pipelines.

Justification

Indah Normal water Konsortium Sdn Bhd is as considered operating in the 100 % pure monopoly market structure since it is really the only provider of sewerage services, working and maintaining on sewage treatment plant life and pipelines in Malaysia. Indah Water Konsortium Sdn Bhd has a monopoly in the sewerage services, functioning and retaining on sewage treatment crops and pipelines in Malaysia and it has sole control over the price. Besides, Indah Water Konsortium Sdn Bhd is reselling unique services which is claimed to be non substitutable. For instance: Indah Normal water Konsortium Sdn Bhd provides sewerage service like no other organization have, so if costumers want to get the assistance from Indah Water Konsortium Sdn Bhd, they must pay them.

PETRONAS Gas Bhd

Products

Petronas Gas Bhd supplied petroleum, natural gas, liquidated petroleum gas and other types of fossil fuels to cars and home.

Justification

PETRONAS Gas Bhd is considered as operating in the pure monopoly market composition because there is only one price in market which control by authorities. Government control the price tag on the product for there is absolutely no close substitute. Authorities attempted to set the price into the same, so that the price would not has large difference. By this, Authorities regulates in the general public interest. For instance: when the price tag on the petrol are same everywhere you go in Malaysia, consolidation of smaller companies into bigger ones enabled some large corporations to escape market discipline by "fixing" prices or undercutting rivals.

5. 0 Oligopoly

Characteristics of Oligopoly

An oligopoly are maximizes gains by producing where the marginal income equals to marginal costs and oligopolies are price setters somewhat than price takers. The barriers to access are high but there only so few firms that actions of one firm can affect the actions of the other firms. They can maintain long run excessive income and their product may be homogeneous or differentiated. There is also perfect knowledge of their own cost and demand functions but their inter-firm information may be incomplete but buyer have only imperfect knowledge as to price, cost and product quality only. The distinctive feature of oligopoly is interdependence, typically made up of a few large organizations. Each organization is so large that its actions have an effect on market conditions which means competing businesses will be aware of a firm's market activities and will answer appropriately.

Tesco

Products

Tesco is a supermarket, it supplying a wide variety of food and household products such as meats, vegetables, soda, television, air conditioner and etc.

Justification

Tesco is known as operating in the oligopoly market framework because Malaysia has a great many other supermarkets such as Jusco, Large and Carrefour so they will have price war between each other and we as a consumer are certain to get more benefit relating to this. Let say if Tesco's soft drinks price drops then another supermarket soft drinks will also drop because they're interdependent. Tesco's price strategy is more concentrate on Tesco's GOOD DEAL Guarantee and EACH DAY Low Price strategy so Tesco is performing long run abnormal profit.

Carlsberg lager beer

Products

Carlsberg lager ale is the flagship in the Carlsberg Group's portfolio of beers. It contains 5% alcoholic beverages by quantity (ABV).

Justification

Carlsberg beer is known as operating in the oligopoly market structure because Malaysia has many other beers such as Tiger beer, Heineken ale and etc. They have got price battle between one another like price of the Carlsberg beverage drop then Tiger beer use some praise to sustain their sales. Tastes of the beers have some different, it indicate differentiated and many beers pop out from the market however they can't make it through in this market due to start-up cost are high. Carlsberg has put forward a new marketing strategy for Carlsberg Sport, the drink so they already created a new field of the marketplace which is a permanent strategy.

Air Asia

Products

Air Asia is Asia most significant low-fare, no frills airline and pioneer of low-cost travel in Asia. AirAsia group performs scheduled local and international plane tickets to over 400 vacation spot spanning 25 countries.

Justification

Air Asia is known as operating in the oligopoly market framework because our country has other air vacations such as Malaysia Airlines and Firefly. They are supply the same services for customer however they all still involve some different. Let say AirAsia offers free seating however the Malaysia Airlines offers assigned seats and the price between each of them also different. This is the product differentiation of both products. The strategy of AirAsia learning is protection, low fare, good services and simplicity so their market can be strong throughout the market market of the air travel.

Maxis

Products

Maxis provide a variety of mobile communication products and services. They provide prepaid call strategies, monthly subscription ideas, international roaming, MMS and WAP.

Justification

Maxis is considered functioning in the oligopoly market composition because here have other communication company like digi, celcom, and Umobile. Maxis and digi supply the postpaid service to customers however the price of both will vary like maxis is RM28 free 200min voice call and 100 SMS, digi is RM43 free 200min and 200 SMS. They can set the purchase price as low as possible but nonetheless have minimum profit to earn so they can be retain long haul. Strategy of Maxis taking part in are good network coverage around Malaysia, good deal and special offers for different age groups and also aim for group and always the first ever to create new mobile programs that why Maxis stand at the to begin the telecommunication market.

Golden Screen Movie theater (GSC)

Products

GSC is a movie theater in Malaysia which is manages Malaysia's first-ever boutique cinema with only Gold Category and Premiere Class Halls inside the Gardens Mall, KL.

Justification

GSC is considered working in the oligopoly market structure because Malaysia has many other cinemas like MBO, TGV and BigCinema. Most of the services provided by them will be the same however the feeling share with the customers are different like some people believe that GSC more comfortable than other theatre. They still place the purchase price at RM11 per solution on the weekdays and weekends even though some cinema was escalates the price of the but GSC still maintain the price of the ticket which designed GSC are playing long run revenue. GSC offers "Special Wednesday Rates", advertising ticket for only RM6. Children and senior citizens are offered at a price of RM5 per solution while pupil will be incurred at RM7 before nighttime on the weekdays by blinking their student cards so now Malaysia curently have 23 GSC cinema including East Malaysia.

6. 0 Conclusion

To conclude this task it pays to to emphasize the marketplace structure that every firm is working, in establishing the main strategies and way where each firm should take to maximize its income or even to reduce reduction as lower as you can. Utilizing the characteristics of every of the four market models, we are able to sort out the marketplace structure of each firm and figure out advantages and disadvantages of every of the market model. The stand below has shows the major characteristics of every market constructions.

With the assistance of the desk above and the studies done on each organization pointed out in this project, we may sort out the companies that we've picked into their individual market model in terms of activities, products and strategies. The table below shows the companies sorted to their respected market model matching with their characteristics.

Pure Competition

Monopolistic Competition

Monopoly

Oligopoly

Weng Yeang Hang up Malaysia Sdn Bhd

Kaspersky Lab

Astro

Tesco

Nescafe

Tenaga Country wide Bhd

Carlsberg

Tupperware

Telekom Malaysia Bhd

Air Asia

Coca-Cola

Indah Water konsortium Bhd

Maxis

McDonald's

Petronas Gas Bhd

GSCinema

Brand's Outlet

Nike

Casio

Logitech

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