Listen to the podcast

Listen to the podcast
Consider the two firms discussed in the podcast in the context of different types of market structures (ex. monopolistic competition, perfect competition, oligopoly, monopoly). What type of market structure do you think each firm is operating in? Explain why you think this using the characteristics of each market type and be sure to elaborate on your analysis.
Here are some factors to consider:
(1) number of firms – note that how we count the firms depends on how we’re defining the product/market. Note that many companies compete in a global market now, so location is not as important as the substitutability of the products of potential competitor firms.
(2) type of product produced: note that in the oligopoly structure firms can be producing products that are identical to one another OR differentiated, that is not as important for oligopoly as is the fact that there are a few firms controlling the market; for monopolistic competition the products are differentiated, but relatively substitutable – so that they can be considered within one market; finally monopolists have a unique product with no close substitutes (substitutes that may exist are not close).
(3) barriers to entry/ease of entry: one of the key things to consider here is the presence of patents, which serve as barriers to entry for a period of time. Note that in monopolistic competition there are low/no barriers to entry, with higher barriers in oligopoly and highest in monopoly. With patents, we also have to think about whether they are making a product differentiated or making it completely unique.

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