Market structures

What market structure best describes the environment within which your organization operates? What challenges and opportunities would arise from higher and lower degrees of government intervention? Provide a rationale to support your selected market structure.

Sample Solution

The market structure best describing the environment within which my organization operates is oligopoly. Oligopoly is a market structure where only a few firms dominate and control the production of a certain type of product or service. The barriers to entry are high, making it difficult for new competitors to enter the industry. In an oligopolistic market, each firm has some degree of influence over the prices they charge and their output level because they all have similar products or services that are highly differentiated from one another (Farnham & Plummer, 2016).

Higher degrees of government intervention in this type of market could present challenges by introducing more regulations and pricing mandates which would limit our ability to compete effectively in the marketplace. These regulations could also lead to greater competition in the form of increased availability of substitute goods and services, resulting in decreased profits for our organization. Additionally, higher taxes imposed on our products or services could reduce consumer demand and lower revenue potentials due to higher prices charged by us as well as other firms operating within this sector (Farnham & Plummer, 2016).

On the other hand, lower degrees of government intervention will create opportunities for my organization such as being free from restrictive regulations that may hamper its ability to compete with other firms. Additionally, lower tax rates may lead to increased consumer demand which would result in improved sales figures thus increasing revenues generated by our organization (Farnham & Plummer, 2016).

In conclusion, an oligopolistic market structure provides both challenges and opportunities depending on how much government intervention there is in regulating prices and taxes among other things. My organization should be aware that too much regulation can stifle competition while too little can lead to unfair practices from dominant players in order to maintain their competitive advantage over others.

References

Farnham, D., & Plummer D.(2016). Managerial Economics:Applications Strategy&Analysis(10th ed.). Retrieved from https://online-learning .harvard .edu/course/managerial-economics-applications -strategy -analysis

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