Exploring Monopolies and Oligopolies
Watch this video, Oligopolies and Monopolistic Competition, to help you prepare for this week’s discussion.
Reply to these prompts by using a business with which your familiar, or a dream business you want to start:
- With your selected business in mind, determine if it is competitive, monopolistic competitive, an oligopoly, or pure monopoly. Explain how you drew your conclusion about its market structure.
- How does the business/firm in this industry determine the price it will charge for the products or services it sells?
Answer preview
Various businesses belong to different market structures. My dream business is starting a restaurant which lies in the monopolistic competition structure. It belongs in monopolistic competition because though there are numerous players in the market, there is differentiation. For example, different restaurants have unique interiors; they provide different foods and beverages, their packaging is unique and so on. The distinction is what makes players in monopolistic competition different from those in perfect competition (Academy, 2012). Also, there are no artificial barriers to entry. People may join the business at free will without restrictions unlike in monopolies where the government hinders entry of new players. The entry into the market is affordable as the startup cost is relatively low. The players of the industry have little control over the price of commodities. The ability to differentiate products allows businesses to determine the rate at which…
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