- Example of perfect competition
Perfect competition is a market situation, where no participant is large enough to command prices of homogenous products. Economic This is a market environment which is dominated by many players, which in this case only take up a small market share. In the real world situation, many industries are characterized by perfect competition (Surhone et al, 2010). This is despite the rise of huge multinationals which have grabbed market command. A good example of an industry experiencing perfect competition is the Brazilian retail industry. In this case, the retail industry is overwhelmed by small companies which only take up less than 5% of market share thus demonstrating the existence of perfect competition. The fish market, fruit and vegetable vendors also demonstrate a scenario of perfect competition (Mankiw, 2011). This is based on the few barriers for entry and exit thus leading to many players.
Oligopoly is a market situation dominated by small number of sellers, thus inhibiting a state of perfect competition or monopoly. Oligopoly lies in between perfect competition and monopoly, whereby few suppliers take control over supplies and market prices. In a scale, oligopoly can be rated at 50 (Sherman, 2004). This is so because it only lies in between monopolistic and perfect competitive markets. A point worth of consideration is that prices in olipogopolistic markets are lower than in monopoly but higher than those of perfect competition.Economic The stability of prices in olipogopolistic is also commendable, since if a company lowers price the others will follow suit (Puu and Sushko, 2002). Examples of industries experiencing oligopolistic market environment include film, cell phone, gas, television, aluminum, steel, and automobile industry. All these industries are overwhelmed by few players who control the market forces. These industries fit the criteria of being oligopolistic in nature based on few players participating in the industry. There are few barriers to entry, thus avoiding a situation of monopoly as well as a situation of perfect competition (Vives, 2001).
- Monopolistic competition
The concept of monopolistic competition has also been in existence in the market environments which is in this case characterized by individual sellers or suppliers.Economic This is imperfect competition, whereby competing producers or sellers sell differentiated products which are branded. In the real world, monopolies have only existed in government controlled markets, for instance in the provision of various services like rail transport and sewage disposal. In the private sector, monopolies are however rare and only approach monopolistic power (Zhelobodko et al, 2010).
Porter-cable is a leading American company manufacturing power tools. Some of the power tools dealt with by the company includes portable band saw, helical-drive circular saw and Belt sander. The products of the company go by the brand “Porter-Cable”. This is a leading brand which has taken its popularity across the globe (PorterCable, 2011).
- There are only a three distinctive products which go by this brand name. This includes; band saw, helical-drive circular saw and Belt sander.
- These products are in the current free from variations. The company has been enjoying little or no competition from the manufacture of these products which goes by its brand name, “Porter-cable.”
- The phrase that the spice of life is what wastes resources is very evident in human society. This is a vividly explained in the nature of human needs, whereby people are never satisfied regardless of what is at their disposal. Economic With this in mind, people keep yawning for more thus leading to wastage of resources as well as variations in process. It should however been noted that people can not live without seeking to fulfill their desires and boosting spice of life thus raising the concept of price (Miller, et al, 2010).
Mankiw, G. (2011). Principles of Economics. London: Routldge.
Miller, F. et al. (2010). Monopolistic Competition. London: Prentice Hall.
PorterCable. (2011). Porter-Cable 18-Volt Tools. Retrieved on 28th Nov 2011, from:
Puu, T. and Sushko, I. (2002). Oligopoly Dynamics: Models and Tools. New York: McGraw
Sherman, R. (2004). Oligopoly: An Empirical Approach. New York: Wiley & Sons Press.
Surhone, L. et al. (2010). Perfect Competition: Neoclassical Economics, Microeconomics,
Factor, Marginal Cost, General Equilibrium Theory, Marginal Revenue Productivity Theory of Wages. New York: McGraw Hill Press.
Vives, X. (2001). Oligopoly Pricing: Old Ideas and New Tools. New York: Wiley & Sons Press.
Zhelobodko, E. et al. (2010). Monopolistic Competition: Beyond the CES. London: Routledge.