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42206(single diploma) – Amal Yusupov

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Each branch has its own market
specificity – the production of various goods, a different industry of
producers, the size of enterprises, the features of technology, the composition
and specificity of buyers, the specifics of competition.

In microeconomics, the most
typical .market structures are generalized and the behavior of
manufacturing firms is studied, leading to the receipt of the greatest benefits
for them-the receipt of the maximum profit. At the heart of these generalizations,
specific recommendations are developed that have important applied importance
in the choice of the company’s behavior strategy in specific market conditions.

The object of the analysis of
competition is the branch. For example, a group of competitors producing goods/services
and directly competing with each other. The purpose of the analysis is to
identify the competitive advantages of the firm and the choice of a competition
strategy.

There are four main market structures: perfect competition, monopolistic
competition, oligopoly and monopoly.

Perfect competition indicates a
market structure, in which a plenty number of small companies compete against
each other. Moreover, firms do not have a significant influence on power of
market. Consequently, the manufacture generally produces the absolute l level
of production, which in turn lead to market has many buyers and sellers trading identical
products so that each buyer and seller is a price taker.

Perfect competition relies on
the following elements:

·       
All small firms are focused to maximize profits.

·       
The goods which offered by the different sellers are largely the typical.

·       
There are not specific preferences between different sellers. It does
not matter for the customer from which firms buy the products.

·       
All firms have free access and exit to the market.

·       
There is perfect information and knowledge about homogenous products.

At present, according to Nelson
statistics, 3885567619 out of the global population 7519028970 people use the
internet. Approximately 3.9 billion internet users are both producers and
consumers. The above mentioned example indicates that the internet is a market,
where a myriads number of consumers/producers operate without any influence on
market power which in turn lead to equal opportunities in this market,
exemplifying one of the features of perfect competition.

     Example of
perfect competition.

          Internet
related industries. The internet has a strong influence on perfect competition
market due to the fact that the internet has made the way of comparison and
check prices easily, quickly and efficiently (perfect information).
Consequently, selling any kinds of good on the internet through a service such
as Alibaba, Aliexpress and E-bay is extremely similar to perfect competition.
For instance, it is becoming more and more popular to use the above mentioned
online magazines to compare prices of any types of product and buy cheaper
ones.

Like perfect competition online
magazines namely Alibaba, Aliexpress and E-bay relies on the following elements:

·       
There also a large number of sellers.

·       
Perfect information and knowledge. It is easy to compare the prices of goods.

·       
There are no significant barriers to entry and to exit to the market.

 

Monopolistic competition is a
type of market structure consisting of many small companies that produce
differentiated products and free entry to the market and exit from the market.
The products of these firms are close, but not completely interchangeable, it
means that there is a difference in price, features, branding and marketing.

By
differentiating the product, the monopolistic competitor reduces price
elasticity. Raising the price, the monopolistic competitor is not deprived of
all consumers, as it happens in the conditions of perfect competition. The
market is somewhat narrowed, but there remain those who steadily prefer the
products of only this manufacturer.

 

Monopolistic competition relies
on the following elements:

·       
availability of many sellers and buyers (the market consists of a large
number of independent firms and buyers);

·       
free access to and exit from the market (no barriers that keep new firms
from entering the market leaving the market);

·       
Differentiated, differentiated products offered by competing firms.
Moreover, products may differ from one another in one or a number of properties
(for example, in chemical composition);

·       
perfect awareness of sellers and buyers about market conditions;

·       
influence on the price level, but in a rather narrow framework

 

Example
of monopolistic competition:

One
of the most convenient example for the monopolistic competition is washing
powder.

There
are quite a few different companies in Poland such as, Ariel, Tide, Ares,
Perwoll, Lenor, Vizir, Perlux, Maxi trat, FF, Persil, Losk, Surf, Bio Power,
Origami and so forth. As
a result, for
the production of new varieties of detergent powders it is not required to
create a large enterprise. Therefore, if firms producing powders will receive
large economic profits, this will lead to the inflow of new firms into the
industry. New firms will offer consumers washing powder of new brands,
sometimes not much different from those already produced (in a new package,
another color or designed for washing different types of fabrics).

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