Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Wonks: Monopolistically Competitive Market to Monopoly - Research Paper Example

Comments (0) Cite this document
There are a lot of advantages for that a firm can exploit from changing market structure. These advantages are beneficial not just for the firm itself, but all the stakeholders have something to benefit from it. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.9% of users find it useful
Wonks: Monopolistically Competitive Market to Monopoly
Read TextPreview

Extract of sample "Wonks: Monopolistically Competitive Market to Monopoly"

Download file to see previous pages In this case, the firm structure has changed from monopolistically competitive to monopoly. After the successful takeover of the potato chips industry, a new firm called “Wonks” has taken over the operations of the entire industry and changing the market structure from monopolistic competition to monopoly. Monopolistic Competition is a situation characterized by large number of buyers and sellers. However, the sellers differentiate their products from other sellers and the products are not homogenous. All the firms in the industry earn supernormal profit in the short-term and normal profit in the long run. Similarly, monopoly is a situation characterized by large number of buyer and only one seller. In this case, the seller charges whatever price he wants to since consumers have no other alternative, but to buy the expensive goods offered by monopoly. As a result, a monopoly always earns super normal profits. (Daft, 1994) The major advantage of a monopoly for the stakeholders is that it saves the wastage of resource. In a competitive market, there is a lot of advertising and over-lapping of resources. However, there is no advertising or over-lapping of resources in a monopoly. This saves the scarce resources which can later be used for the production of goods and services and can translate into lower prices for consumers. Hence, monopoly benefits not just the firm itself, but it helps the consumers and the government in the efficient allocation of scarce resources. Scarce resources are saved and their wastage is minimized as there is no over production of goods which can happen in a competition as each producer produces goods separately. Since monopoly is a single seller earning large amount of profits, it provides the seller enough capital for research and development. This again leads to efficient use of resources and cost cutting for the consumers. The government is also benefitted as it does not have to spend on research on development from its own pocket. Monopoly is also beneficial for the firm itself. It gives the seller good control over the market. While competitive structures are price takers, monopoly is not a price taker. This will enable “Wonks” to earn large amount of profits and the owners of the firm will benefit greatly from the changed structure of the industry. (Bamford, 2003) Since monopoly is a power in itself, it will exploit consumer for the benefit of the firm itself. It will produce an output which will be lesser than the previous output of the potato chips industry. “Wonks” will produce fewer packets of chips than the previously competitive industry to charge higher prices and earn large amount of profits. Monopolistically competitive industry would have been producing. This can be represented in the following diagram: It can be seen in the above diagram that it is the forces of demand and supply that dictate the prices and output in the markets. However, in the monopolistically competitive market the products are different and differentiated on special features and therefore producers have a room of charging a little premium on their product. However, when the market structure changes from competitive to monopoly the producer gains a lot of power. The seller dictates the prices and depending on the price that is being charged output is determined. This result in higher prices being charged as compared to a competitive market and output also decreased from q1 to q2. Hence, the shift from monopolistic competition to monopoly can be defined as higher prices and lower output in the market. (Lipsey and Chrystal, 2004) The best structure for any company, let alone Wonks, is monopolistic structure. The reason why this ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Wonks: Monopolistically Competitive Market to Monopoly Research Paper”, n.d.)
Wonks: Monopolistically Competitive Market to Monopoly Research Paper. Retrieved from
(Wonks: Monopolistically Competitive Market to Monopoly Research Paper)
Wonks: Monopolistically Competitive Market to Monopoly Research Paper.
“Wonks: Monopolistically Competitive Market to Monopoly Research Paper”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Wonks: Monopolistically Competitive Market to Monopoly

Clothing Retail Market in General

The industry is оverwhelmed with cоmpetitiоn frоm cоmpаnies which hаve invested in hi-tech mаchinery leаding tо greаter efficiency оr hаve plаced their prоductiоn tо fаctоries in cheаp lаbоur cоst cоuntries tо prоduce their prоducts. Hоwever, mоst pаrt оf the cоmpаnies in this sectоr mаke nоt very high prоfits. Tо increаse the mаrket shаre in this аrenа is nоt аn eаsy tаsk, аnd therefоre it needs а greаt deаl оf endeаvоur, knоwledge, аs well аs energy аnd mоney.
Clоthes retаilers fаll intо twо brоаd cаtegоries: firstly, thоse selling оwn-brаnd clоthing аnd, secоndly, thоse selling third-pаrty weаr. Mаjоr retаilers such аs Mаrks & Spencer аnd the Аrcаdiа Grоup аre gооd exаmples оf the first grоup, аs аre chаin оperаtiоns s...
18 Pages(4500 words)Research Proposal

Market Analysis and Segmentation: JetBlue Airways

It is for this reason that JetBlue management painstakingly handles the services and amenities that the company offers. They present very competitive technology as far as providing comfort to their passengers is concerned. Destination-wise, JetBlue Airways may be considered a specialty carrier that is relegated to a short-haul concentration, taking advantage of similar economies available with advanced technology and updated equipment. A short-haul carrier, JetBlue operates efficiently by consolidating services and economies of scale. Consequently, as a short-haul carrier, JetBlue’s revenues are considerably high compared to other airline companies.

In 2003, JetBlue declared a profit of $ 17.6 M for its first quar...
6 Pages(1500 words)Case Study

Starbucks in Chinese Market

In the year 1996, the coffee giant marked its global presence. Up until 2004, the Chinese government prohibited Starbucks to operate its own stores in China. As a result, the coffee giant enters the Chinese market by joint-venturing with Chinese food and beverage companies and licensing other companies to own and operate its stores--differs from its domestic approach. But the company was able to easily overcome its initial obstacles and marked its presence in China very quickly and successfully with great brand recognition and customer satisfaction. The company also tailors its stores to match the local atmosphere. This is a transnational strategy. “For example, the Starbucks strategy in Shanghai is to attract middle to high...
7 Pages(1750 words)Case Study

The Challenges of Foreign Market

Any multinational company is exposed to risks such as change of foreign currency exchange rate, commodity prices, and interest rates because it denominates its transactions in foreign currencies. That’s why there is also some uncertainty in future earnings, liabilities and assets values.
Therefore, before taking a decision on the country of entry, a profound analysis of its current political and economical situation is to be performed. According to Kotler and Armstrong (351-361), a decision on whether to enter a foreign market should be based on a profound analysis of potential risks and opportunities, as well as the company’s internal resources.
The company is a Limited Liability that exports roasted and gro...
11 Pages(2750 words)Case Study

Competitive Success

Core competencies, which usually flow out of a company, provide characteristic benefits to both the customers as well as any other individuals attached to it. These are generally espied as being the foundation of forming a competitive advantage within the said company. (Lowson, 2002)
To make it sustainable it is important that the same competitive advantage is held out for a long period of time and the people carrying out the same tasks and duties remain steadfast in their approach time and time again. What this will do is to make the process a sustainable one and the advantage in terms of competition would remain as long as it could, no matter how difficult or tough the circumstances are. Similarly, transportation of goods h...
12 Pages(3000 words)Assignment

Oil Prices by OPEC and Market Fundamentals

Market failure is defined as the inefficient allocation of resources by the market, the free market is considered to optimally prices and resources in the production of goods and services, and this is because the price and quantity produced are determined by market forces which include the demand and the supply. The control of prices by a firm or an organization in the market results in market failure, therefore OPEC leads to market failure due to its nature in the market.

OPEC was formed in 1960 by 5 oil-producing countries which include Venezuela, Saudi Arabia, Kuwait, Iran and Iraq, The aim of this organization was to unify petroleum-producing countries in order to realize fair and stable prices of oil .other oil-pro...
6 Pages(1500 words)Report

Segmentation, Target Market, and Positioning of the Fortified Wine

There are some types of fortified wines which carry a rich legacy and ethos of the Australian culture and society. This rich history and distinct flavour can be utilised to penetrate growing markets like China and build a strong brand presence there when the market is relatively immature. Moreover, tweaking of marketing, distribution and pricing strategies would offer greater sales potential for the fortified wine industry itself in Australia.

Among the variety of wines that are available, the Australian wine industry offers an attractive bevvy of the following variants of red wine, white wine, vintage wine, sparkling wine, dessert wine and fortified wines.

The fortified wines are also termed as “liquid...
10 Pages(2500 words)Business Plan

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Foreign Market Entry and Diversification

... which Modelo decided to capture the target market. Gambrinus was also an experienced distributor which was operating in other 25 states in the country. There was huge competition between these two distributors although they were not catering to the same geographical market. According to Modelo’s strategy, distributors were responsible for all activities regarding the transport, custom clearance, insurance, pricing strategy, advertising campaigns and sale of the beer. However Modelo reserved the right of final decision regarding the brand image. Furthermore a subsidiary named Procermex Inc. was set up by Modelo with the purpose of coordinating, supporting and supervising the two distributors of the company. The company maintained a healthy...
7 Pages(1750 words)Assignment

Entry into Foreign Market

However, political instability and turmoil are yet a few of the hindrances which could affect the stock markets and in a worst-case scenario may as well, completely shut down businesses (Root 1982). The new business practices, on the other hand, involve a transparent setup and a free market, free of turmoil to operate and maximize production (Bennett 1998). Also, in such a case, the consumer must also be able to spend on the product, to make it a success. However, Burma currently has strong institutions having a hold on the resources which need to be exploited, i.e. a few of the military generals and autocrats have access to the resources, and thus, dealing with these groups might prove to be a waste of the corporation`s own effor...
6 Pages(1500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Research Paper on topic Wonks: Monopolistically Competitive Market to Monopoly for FREE!

Contact Us