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Big box stores vs mom and pop stores - Assignment Example

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In a monopoly, no competition exists with any other firm and the monopolist firm enjoys marvellous profits. A monopolistic firm can set its prices as they are able to…
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Big box stores vs mom and pop stores
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"Big box stores vs mom and pop stores"

Download file to see previous pages Each restaurant offers something different than the other and so they are free to select whatever price they like for their products.
Examples of Monopolies include public utilities like water, gas and electricity, cable TV, the local phone service companies. Important to note, that monopolies can exist in a market locally due to their geographical locations. Entry into a market where monopolies exist is quite difficult by new businesses since the large firms have larger market shares and there is not much left for the new companies in the market both in terms of buyers and profits.
Competition is directly related to the methods and procedures by which the companies produce and sell their products. Different market structures are found in different industries which imply that there are different kinds of buyer to seller relations in every market. In a monopolist firm, they are able to increase or reduce the prices of their products (due to product differentiation), however, they cannot do so with full liberty, they have to abide by the unfriendly forces of the market. Sellers’ rivalry against each other involves sales-promotion costs along with the expenses of differentiating their products in order to attract customers. As a result, buyers get more variety in the products but in the long run the products prices involve the additional costs involved. Since the sellers in a monopolistic competitive market are not likely to be equally flourishing in their product policies and sales promotion, some of them will be successful in achieving profits exceeding the basic interest on their investment, such profits will be earned from the buyers that have been attracted. (Karier, 241)
The market and the monopolist’s demand curves are found to be the same. Demand of the monopoly is the demand of the industry and hence illustrated by a downward curve. However, the ...Download file to see next pagesRead More
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