Compare and contrast four different market structures

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Compare and contrast four different market structures

It usually does not work, it does not last, and it has important defects Extremely High Very high Exclusivity, non practical, status symbol In this way, you can vertically position different brands and product versions, also using clues from advertising campaigns.

If you compare widely different goods fulfilling the same highly-relevant need, you may distinguish at the extreme of your spectrum necessity goods and at the other luxury goods. In other cases, what makes this difference is, instead, the nature of the need fulfilled and the number of needs fulfilled.

How to Compare & Contrast Organizational Structure |

As a Compare and contrast four different market structures rule, better products have a higher price, both because of higher production costs more noble materials, longer production, more selective tests for throughput, Thus, the quality-price relationship is typically upwards sloped.

This means that consumers without their own opinion nor the capability of directly judging quality may rely on the price to infer quality.

They will prefer to pay a higher price because they expect quality to be better. This important flaw in knowledge and information processing capability - an instance of bounded rationality - can be purposefully exploited by the seller, with the result that not all highly priced products are of good quality [ 1 ].

Through this mechanism, the demand curve - that in the neoclassical model - is always downward sloped, can instead turn out to be in the opposite direction, with higher sales for versions having higher prices.

Horizontal differentiation can be linked to differentiation in colours different colour versions for the same goodin styles e. A typical example is the ice-cream offered in different tastes.

Product differentiation - a key concept in Economics and Management

Chocolate is not "better" than lemon. Some consumers would prefer lemon to chocolate, others the opposite, but this relates not to the product line structure but to them both as a whimsical choice or as a category of people they feel, choose or know to belong.

It is quite common that, in horizontal differentiation, the supplier of many versions decide a unique price for all of them. Chocolate ice-creams cost as much as lemon ones. Similarly, several variants of tastes or flavour are often offered at the same price. In restaurants, all desserts might be all priced at the same level.

Some would say that in such cases the consumer is really free to express its preferences, as all alternatives cost the same. Another example of horizontal differentiation is represented by films: This example shows that the internal organization of the differentiation space can be structured around "genres" and several similarity measures can be taken e.

Fashion waves often emerge in horizontally-differentiated markets with imitation behaviours among consumers and specific styles going "in" and "out". Other examples of horizontal differentiations are politically-oriented newspapers and political parties.

In certain conditions, several versions of horizontally differentiated products can be "located" along one or more axes of differentiation and some "distance" measure can be computed.

Consumers can then interpreted to have an "ideal" location and to rank all versions according to that distance with preferred version being nearer. This distance can be symmetric or asymmetric, i. This is similar but not identical to what happens to vertical differentiation.

In the latter, the higher the better, irrespective of consumer ideal position. However, more in general, horizontal differentiated versions may not be ordered along axes, but merely juxtaposed.

Mixed differentiation Certain complex markets are characterised both by horizontal and vertical differentiation. The quality of the materials can often be seen as a vertical differentiation but some other elements are clearly horizontal, like shapes. Internal to each version of clothing, there are different sizes e.

S, M, L, XL for Small, Medium, Large and Extralarge respectively, translated - with many difficulties - into numbers, according to national and international standards, often deviated by companies. This is a case when the consumer should know his "type" and look for products matching it.

He has no or very mediated control over its size. Consumer evolution of preferences for sizes is led by objective bodymass increases and other changes in the shape of the body. Conversely, the production should reflect the distribution of sizes in the target population but some sizes may remain unsold and some people disappointed.

Another great example of mixed differentiation is the car market, with a huge number of parametres, partially horizontal and partially vertical. Earlier, the same personal selling activity leading to the purchase can differentiate the service in one place from what is supplied somewhere else.

Compare and contrast four different market structures

A typical reason for mixed differentiation is the different suitability of versions of the good to a wide variety of planned activities by different consumers. In terms of one specific activity, there may be vertical differentiation with some versions being objectively better than other for such activity but across the range of possible activities you face horizontal differentiation, what, coupled with consumer heterogeneityproduce an overall mixed differentiation.

In such environments of mixed differentiation, consumers can develop fairly different styles of comparision, with some spending large amount of time getting exposed and evaluating versions, talking with others and sharing judgments, while others drastically reducing the difficulty of the comparision through repurchase of very classical items.

Some consumer explore many alternatives, others try to reduce the number of the options to the the lowest possible. Some would analyse many features of every option, others would concentrate on the highest ranked features.

Some would keep into account several variables and "compensate" across weaknesses and strenghts, others would set minimal requirements independently for each variable, without comparison across axes.A firm under Perfect competition is a Price-taker, i.e.

an individual firm has no control over the price and has to accept the price as determined by the market forces of demand and supply. A monopolist is a Price-Maker, i.e., a firm has complete control over the price and fixes its own price.

A. Dear Twitpic Community - thank you for all the wonderful photos you have taken over the years. We have now placed Twitpic in an archived state. May 19,  · There are four primary types of economic systems in the world: traditional, command, market and mixed.

Each economy has its strengths and weaknesses, its sub-economies and tendencies, and, of course, a troubled Will Gemma. * Compare and contrast the four different market structures (perfect competition, monopoly, monopolistic competition, and oligopoly).

* Select an organization with which you are familiar and identify the market structure of that organization. Statutory Authority: The provisions of this Subchapter P issued under the Texas Education Code, §§(c)(4), , , and , unless otherwise noted. Oligopoly is a market structure; monopolistic competition is another market structure.

Compare and contrast four different market structures

They compare in that each is a type of market structure. Both operate in markets with imperfect competition.

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