Hotel Market in Parkersburg and Pure Competition - Case Study Example

On prices in a competitive market, the prices are determined by the level of demand and supply, when demand increases then prices also increase and when the supply declines then prices are expected to increase, also that in the long run, the market is at equilibrium, for this reason, therefore, the hotel market is characterized by the determination of prices by market forces and therefore we conclude that fulfills one of the conditions of a competitive market. In pure competition, there are no barriers to entry, for our case the hotel market is characterized by free entry and exit by firms and this is evident from a large number of firms in the industry and the lack of regulations by the government to restrict entry into the hotel industry.

The hotel market firms are also characterized by the aim to maximizing their profits, this means that the firms produce their products in an efficient manner in order to maximize profits, this is evident from the high competition in the market where every firm aims at increasing their consumer base by offering more and quality products to consumers. Conclusion:From the above discussion, it is evident that the hotel market is purely competitive and this is shown by the characteristics of the hotel market in Parkersburg, some of the characteristics fulfilled include perfect information, product homogeneity, free entry and exit by firms, maximization of profits by firms and determination of price by market forces.