Industry Categorization

This document discusses the categorization of industries based on market structures such as oligopoly, monopoly, monopolistic competition, and perfect competition. It provides examples of industries in each category and explains the characteristics of each market structure.

Running Head: INDUSTRY CATEGORIZATION 1
Industry Categorization
Name
Date
Affiliation

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Industry Categorization
Question 2
Classify each of the following industries or organizations as an oligopoly, a monopoly, or being
monopolistic or perfectly competitive:
a. Athletic shoes -Oligopoly
b. Restaurants-Perfect competitive market
c. Watches-Monopolistic competition
d. Aircraft-Oligopoly
e. Department of Motor Vehicles-Monopoly
f. Ice Cream-Perfect competitive market
g. Electricity and Utilities-Monopoly
Question 3
Oligopolistic market structure is the type of market structure that comprises of several
barriers to entry that bar new companies from joining the industry. As a result, there is limited
competition since firms can either collaborate or compete against each other (Farnham, 2013).
The Athletic shoe industry and the aircraft industry are the industries, which operate under the
oligopoly market structure. The Athlete shoe industry is gradually joining the global oligopoly
market structure. It comprises of few numbers of firms such as Adidas, Nike, Athleta, Sketchers,
and others. The aircraft industry, on the other side, is also one of the industries difficult to enter.
The following statement stands for the reason that there are few companies which manufacture

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airplanes (Eizenberg, 2014). Gulfstream and Boeing are some of the famously known
manufacturers of airplanes.
Perfect competitive market structure is the type of market structure, which is
characterized by several sellers and buyers. In this type of market structure, similar products are
provided to the customers, and there are free entry and exit into the industry. Besides, consumers
have extensive knowledge of the prices of the products charged by every firm in the industry,
and firms enjoy a limited market share. Restaurants and ice cream industries are the industries
which operate under a perfectly competitive market. With the existence of multiple numbers of
people eating in restaurants as well as the existence of both small and large restaurants, joining
this industry becomes very easy. However, there is a lot of competition since all restaurants serve
food, and the demand for the food varies due to the quality of the food served (Fan and Yang,
2017). Like restaurants, the ice cream industry also comprises of numerous ice cream
wholesalers and retailers who both operate on either large scale or small scale. Entering into the
ice cream market is the same as entering the market for restaurants. Even though surviving in the
industry may seem to be difficult, customers have several choices, and there are no barriers to
entry (Farnham, 2013).
Monopoly is the type of market structure in which the whole market is controlled by only
one firm. In such a market structure, there are no alternatives for consumers. Therefore, the firm
comprises of the highest market share. As a means of increasing prices, firms tend to decrease
the amount of output produced (Fan and Yang, 2017). This type of market structure is
characterized by high levels of barriers to entering and exiting the industry. Department of Motor
Vehicles organization and the electricity and utility industry operates under a monopoly market

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structure. In the United States, there is one Department of Motor Vehicles that are regulated by
the United States government, and it is a necessity to the Americans. On the other side, an
Electricity and utility company is usually one organization that is essential to the people.
Moreover, no alternatives through which people can access the same services offered by this
company are available (Fan and Yang, 2017).
Monopolistic competition is the type of market structure, which comprises of various
small firms, all selling similar but differentiated products. There are no barriers to entry into this
market structure, and firms experience stiff competition from one another. The Watches industry
operate in such a market structure (Carbaugh, 2010). In this industry, several watchmakers
manufacture watch brands which are slightly different from each other. Examples include Rolex
and Movato, some of the companies, which manufacture luxury watches.

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References
Carbaugh, R. J., (2010). Contemporary economics: An application approach, 6th Ed., M.E.
Sharpe, Armonk, NY.
Farnham, PG. (2013). Economics For Managers 3rd Edition. ISBN-13: 978-0132773706
Eisenberg, A., (2014). Upstream Innovation and Product Variety in the US Home PC Market.
The Review of Economic Studies :rdu004.
Fan, Y., and Yang, C. (2017). Competition, Product Proliferation, and Welfare: A Study of the
U.S. Smartphone Market. Tech. rep., mimeo, University of Michigan