Description
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Competency
Understand various market structures and impacts upon firms, consumers, and government policies.
Course Scenario
Oil Company X is a large oil refinery which has been expanding and taking on new investment projects. Recently, they have considered building a pipeline that stretches across the United States, from Canada to New Orleans.
The Cost Department is looking to determine the impact of the pipeline on the current market structure, and they have asked you, a team member of the department, to submit a report on the expected changing market structure.
Instructions
As a cost analyst at your firm, you are asked to evaluate the type of market you are performing in. Assume the current number of oil companies exist in the market. After the pipeline is built, extensive trade restrictions will drastically increase Oil Company X's hold on the market.
Submit a 2-page report detailing the current market structure, and the anticipated market structure after the pipeline is built. You will also include tables to show the characteristics of each of the above market structures and where our firm conforms or does not conform to the characteristics of the different market structures. Be sure to explain the impact on price and quantity, and any pertinent changes to the firm's pricing strategy after the change in market structure.
The current market shares of each company are shown below, before the pipeline is completed and trade restrictions are implemented.
Format your report to include a title page, introduction, conclusion, and references. Include all relevant graphs, equations, and calculations. Show your work on calculations to ensure you receive partial credit for incorrect answers. No credit will be given if your work is not shown. Remember to cite your sources using correct APA format, and also use correct grammar, spelling, and formatting.
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Explanation & Answer
Attached.
Market Structure for Pipeline
1
Market Structure for a Pipeline
Insert Your Name
Name of the Institution
Instructors Name
December 2018
Market Structure for Pipeline
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Market Structure for a Pipeline
Company x is currently operating in the oligopoly market structure where there exist only a few
numbers of firms which creates a state of limited competition. This is because the oil company is
either competing partially or it is collaborating with other firms in order to maximize profit
shares from the market. In this market structure, all the companies are basically utilizing
collective market power to drive up prices and earn more profits. Company X is currently
operating on the assumption that all the firm’s in this market structure are in the business to
maxi...