Analyzing Market Structures: Monopoly, Oligopoly, and Competition

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Assessment 4
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Table of Contents
Table of Contents
Market structures.............................................................................................................................3
Monopoly.........................................................................................................................................4
Oligopoly-........................................................................................................................................4
Monopolistic Competition...............................................................................................................6
Competition-....................................................................................................................................6
Issues in The Market........................................................................................................................9
References......................................................................................................................................12
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Market structures
Market Structures is the process of producing number of goods and services and selling them in
the market. The market structure is judged according to the competitions a company in the
market. The market structures also define the market to be full of competition and organizational.
Market is a place where the seller and the buyer meet at a physical location and exchange the
goods and services produced in return of the money form the buyers.In economics,market is a
place where the buyer and the seller perform various marketing activities, for the selling of goods
and services. The buyers and sellers in the market meet at a location and sell their goods and
services.
There are various elements of market structure-
 The number of sellers operating in the market
 The number of buyers in the market
 The total consumers in the market as a whole
 The products and amenities provided by the firms in the market.
 Nature of the product, goods and services in the market.
 Barriers in the market to the buyer and the seller
 Efficiency of the firm in producing the goods and services at a reasonable cost.
 The total amount that has been spent by the company in the action of the business.
 The factors of production that are implemented by the company in order to produce the
goods and services in the market.
 Changing behaviour of the customer in the market and the changing market behaviour.
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 Explaining the services which are provided by the company comparing it with other
countries.
Market structure is defined as of four types-
Source (Thinglink, 2019)
Monopoly-The characteristic of the monopoly market is that there is only a single seller in the
market. The customer has to rely on the services and goods which are provided by the single
seller in the market.If the customer is not satisfied with the products, he has to buy that product
which can satisfy but in a less way. There are also high barriers in the entry of the market as
there is a single seller only.This market does not provide any substitute to the buyer. The buyer
has to get himself satisfied with what the seller is providing.There are many companies in the
market that are monopolies.
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Oligopoly-Oligopoly is the structure where there are few sellers in the market that sells the
products, goods and services in the market. In the oligopoly market, there is a barrier in the entry
of a new business (Ayres, 2017).There are some companies in the market that follows the
oligopoly. There are two market produces in the oligopoly market-
Homogeneous product- The businesses that are manufacturing homogeneous products called as
Perfect or Pure Oligopoly. Examples are- Zinc, Copper, Aluminium and Iron, etc. Homogeneous
products are those which cannot be distinguished by any supplementary company or
competition. The products are similar which are created by different companies(Ayres, 2017).
Heterogeneous Product: These products are sold by different companies in the market.These
products can differ from association to association. The products can be discriminated in terms
of structures, worth, value, amount and many more. The market type is said to be as Imperfect or
Differentiated market. Examples of these products are- soaps, mobiles, television, refrigerators
and detergents(Ayres, 2017).
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Source (Businessjargons, 2019)
Monopolistic Competition- monopolistic competition is well-defined as the marketplace where
altered buyers vend different products but are not the supernumerary of it. The demand curve is
inelastic in the market structure. The vendors and purchasers of the businesshave the liberty to
arrive in and depart the market anytime they want. The companies are capable to make usual
profits in the long run and supernormal profits in the small run. Monopoly and monopolistic
competition is often confused but actually are different market structures(Ayres, 2017).
Competition-In this type of market, the different companies in the market compete with each
other by selling the products to the consumer in the market.The sellers try to gain as many as
consumers by selling the goods and satisfying their needs. The market structure is defined as to
satisfy the needs and wants of the customer.The judgment of this type is unpredictable. The
seller as well as the buyer both cannot judge the market, they are operating in.The main moto of
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this type of market structure is to gain as much as consumer in the market. The company, who is
able to produce more goods in the market, will be able to gain more consumers in the market.
Source (Taelor, 2019)
Rod Sims, the Chairman of Australian Competition and Consumer Commission said that the
Australian finance sector is ‘a cosy banking oligopoly’. ACCC also gave cautionary to the banks
about the fastgrowing in the commercial sector. Rod Sims said this account in the board at ASIC
(Australian Security and Investments Commission). Rod Sins stated the rising market share and
bank incomes in the recent years have presented that the marketplace has amplified and
competitive is also cumulative. After the global financial crisis, assets increased from 65% to
approximately 78% (Eyers, 2016). Rod Sins mentioned the statistics for the year 2014 (Eyers,
2016) (Eyers, 2016).
He stated the construction of the market to be oligopoly because of the various competitive
companies in the market.Sins added that after examining the market and the contestants, the
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competition didn’t look corrupt. If considering the statistics, the profits have gradually increased.
There are only four major banks and a lot of contestants. The financial sector has increased from
last 10 to 20 years. After the whole evaluation, it was found that the market was a bit cosy and
not competitive(Eyers, 2016).
Sims told the media to take act the ANZ banking group that manipulated the bill swap rate. Sims
made the statement again of market being a bit cosy rather than competitive.
During the media communication with Fairfax Media, Sims told that the ASIC has taken some
actions in contradiction of the ANZ banking group and investigating about each and every word.
After the discussion with the media, ASIC and ACCC established that the ASIC will aid in the
guideline and application of the action (Eyers, 2016).
The Financial System Inquiry achieved by David Murray stated that the growing of some of the
banks in the market will diminish the competition. David focused that this needs to be checked
proactively. He mentioned some of the banks that are full-grown in the recent years. He said that
the wealth organization platforms are growing. AMP is alone holding 80% of primary planner
relationships. Murray mentioned that the main attentiveness about the wealth management
focused on safeguarding the channels of delivery and also improving the product features.
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Issues in the Market
From the above statement by Rod Sins, it was understood that the banking sector was attentive
on the 4 major banks which rose in market quickly. Rod Sins mentioned that the finance is a bit
cosy but the banking sectors were growing in the market rapidly. The marketplace is not
economical as it was predictable. Sins mentioned that the market is cosy instead of being
competitive.There stay four main banks in the nation and the development for all the banks have
amplifiedprogressively from 67 to 78% in the market. Sins stated the marketplace to be
oligopoly. Oligopoly market is a market structure where there are different types of purchasers
and vendors. The vendor produces goods and services for the buyer and tries to attain maximum
number of customers towards their company. The competition inclines to be advanced in contrast
with the other market structures. The issues in the oligopoly market are:
1. There are number of wholesalers and shoppers in the market. Oligopoly market bids large
firms to originate into the market, contest with different markets and tries to gather as
many as customers in the market.The customers will be brought up by offering and
satisfying the needs of the customer (Memić, 2015).It may happen that the companies
will come with some similar products. This may confuse the buyer depending upon the
quality and durability of the product. To avoid or after getting frustrated from the
products, the buyers sometimes leaves the product.Examples of these identical products
are petrol, steel, iron, copper, aluminium.
2. Some of the new businesses desire to enter oligopoly market for selling the products,
goods and services. But there are certain obstacles in the entry of the marketplace. The
main barriers in the admission of the new corporations are patents and copyrights,
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possession, administrationlimits and luxurious start-up. Because of the barriers, the
companies are not able to enter in the new market.If a country pursues to enter in the
market, it has to be financially strong and powerful in order to gain more customer
attention. The more the customers, the stable will be the market(Memić, 2015).
3. The companies that are reliant on on some other businesses cannot act self-sufficiently on
other firms. This also becomes matter of concern for adependent company to act self-
sufficiently in the market.
For example- if a gasoline company attempts to lower the amount of petrol for the
customer in order to contest with the contestants, it will occur that the participants will
decrease their value also(Memić, 2015).
4. The key issue in the oligopoly market is that it proposes few options to the consumer.
There arenumerousbusinesses in the marketplace, but only a few are accessible for
working in the oligopoly market. This makes the customer to select from fewer
corporations. Sometimes, there are businesses that do not please the wants and
requirements of the purchaser, no other options areobtainable for them. This way the
customer goes for those services and products that gratify their wants partially.
Below mentioned are the solutions to the issues in the oligopoly market:
1. Solution: In order to remove the misperception created in the consumers due to new-
fangledmatching products established by different firms, there must be some commercial
advertisement. Practical consequences and appraisals shared by the firmwill help them
choose the products according to the reviews, information and results by the company.It
will aid customers to take improved decision and endure to use products of same
company instead of altering to products of other firm. Also, visual effects advanced over
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the explanation of product by company will also decrease the misperception among
customers while choosing different produces within the market of oligopoly.
2. Solution: Alterations and development of equivalent opportunities for different
companies so that the company who desires to enter oligopoly market for vending their
services. This can be implemented by reducing the barriers and developing a new
structure for marketing. A platform will be provided to the investors in order to enter the
market and contribute in the development of the business. Modification under current
rules and guideline to interest large companies to sell their products and services in the
oligopoly market. This will play an important role for seeking new companies in joining
the oligopoly market(Memić, 2015).
3. Solution: Growth of self-governing platform and construction for those companies who
are dependent over other companies in order to enter the oligopoly market to smoothly
sell the products and services in the market.To provide chances for different reliant
companies to work smoothly within the market in the same way as other are working.
4. Solution: Expansion of new market plan in order to offer huge amount if selections for
the consumers as well as firms involved within oligopoly market. It will raise the acts of
businesses working within oligopoly market resulting in generation of various new
opportunities and choices of products available for the customers(Memić, 2015).
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References
 Ayres, C. (2017). 10 Pros and Cons of Oligopoly [Online]. Greengarage. Available at-
https://greengarageblog.org/10-pros-and-cons-of-oligopoly [Accessed on 28th August,
2019].
 Business jargons, (2019). Market Structure. Business jargons. [Online]. Available at-
https://businessjargons.com/market-structure.html [Accessed on 29th August, 2019].
 Eyers, J. (2016). ACCC warns 'cosy' banks it is concerned about competition. [Online].
SMH. Available at- https://www.smh.com.au/business/banking-and-finance/accc-warns-
cosy-banks-it-is-concerned-about-competition-20160322-gnojod.html [Accessed on 28th
August, 2019].
 Memić, D. (2015). Banking Competition and Efficiency: Empirical Analysis on the
Bosnia and Herzegovina Using Panzar-Rosse Model. Business Systems Research6(1). pp.
72-92.
 Taelor, F. (2019). 4 Types of Market Structure. [Online]. Thinglink. Available at-
https://www.thinglink.com/scene/652900472708923394 [Accessed on 2nd September,
2019].
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