The Types Of Four Market Models

In the business enterprise environment the members in the various marketplaces are either price takers or price producers. Price takers are those participants who don't have a say in the prices that dominate the marketplace while price designers are the ones that help set the prices that exists on the market. Sellers or purchasers are capable to be either however in most cases the buyers are the price takers. It is because, they do not normally have control over the prices that exist in the market. It is therefore the aim of this newspaper to compare four of the marketplace models and give a description as well as an opinion on each one of these models.

Pure competition is one of the market models found in a free of charge market environment. It contains many vendors and clients who operate in standardized goods and services that are sold at prices set by forces of demand and offer. In addition, you can find free movement of information between the buyers and sellers with the sellers having understanding of products prices. Moreover, "New firms can freely type in and existing organizations can widely leave simply competitive market sectors. No significant legal scientific, financial, or other obstacles prohibit new companies selling their outcome in any competitive market" (McConnell, p 150). It bears noting that the organizations don't have control over the costs that prevail in the forex market hence they are really price takers somewhat than makers. Also, the products in this market are virtually equivalent and this causes it to be problematic for the firms to market the products above the prices that prevail on the market. In addition they cannot sell below the marketplace prices as this might lead to a loss of revenue and gains making them uncompetitive.

Monopoly power is a market environment that is seen as a one participating retailer who dominates the whole market and affects the prices that prevail on the market. The lifestyle of a monopoly is usually identified as a failure on the market as the seller is a price maker and influences price lay out by other businesses regardless of their location, number or size. A monopoly organization is discovered as a retailer who is qualified to give a significantly large numbers of products into the market enabling it to regulate the complete market. Besides, the monopoly gets the power to raise the prices of both goods as well as services but still be in a position to sustain its customers. Subsequently, buyers are still left with the decision of either obtaining the products at that price or go without them.

Another form of imperfect competition is the monopolistic competition that is characterized by several small organizations which produce and sell products that are differentiated from each other. The merchandise in this market are close substitutes and it becomes very easy for the clients to interchange them. It really is note valuable that monopolistic competition is a hybrid of pure competition and monopoly vitality for the reason that, there are many firms like the perfect competition but the companies have control similar to that of monopoly firms. The firms respond like monopolies though nothing of the companies have complete control over the marketplace. "A 100 % pure monopolist has no immediate competition because certain barriers keep potential competitors from joining the industry"(190). The monopolistic competition varies from real competition for the reason that the vendors who exist in the market compete with one another while maintaining high profits as they control the costs. Later as the marketplace grows more sellers join the marketplace and the competition grows resulting in a reduction in prices. Because of this, the demand for products in each of the companies reduces and the firms are subsequently in a position to preserve their customers through brand devotion. Furthermore, they can therefore raise their prices without loosing their customers.

Oligopoly refers to a market composition that is seen as a the life of few but relatively large firms who dominate the marketplace controlling the costs. "Exactly the same barriers to entry that create natural monopoly also donate to the creation of Oligopoly". (217) The top firms act along such as a cartel when reducing competition as they also compete with each other. It is worth mentioning that the market structure has hardly any sellers who are very large and they sell identical or highly differentiated products. Examples of companies that are considered to be oligopolies are those in the computer, tv set broadcasting and pharmaceutical business.

In my thoughts and opinions some of the marketplace structures especially the monopoly market framework and the oligopoly are failures of the markets as they are not favorable to either the purchasers or sellers on the market. Monopoly firms are considered to be unlawful whereas the oligopolies are believed to be natural in the market segments. When the products in either of these markets are believed to be essential and requirements for the potential buyers it becomes unfavorable for the customers as the prices set aren't pocket friendly. The barriers that exist in these market set ups are not beneficial as in addition they tend to oppress the tiny firms that make an effort to enter the highly dominated markets. The firms involved with these structures have a tendency to be inefficient given that they do not face a great deal of competition that produce them cut down their costs and produce optimally.

Pure competition market constructions will be the best market conditions to own as they allow for good competition and efficiency of the market segments. The clients also get prices that are friendly and they have different choices in the market since there are incredibly many sellers producing the same products. They have the flexibility to enter in and exit the market as they do not experience high costs during entrance and exit. In addition they have a tendency to enjoy normal gains over time. However the primary disadvantage of the kind of market framework is usually that the sellers do not have sufficient funds to get highly as they make just enough profits to maintain themselves running a business. Companies do no therefore commit more in developing their products easier to entice more customers.

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