ECO 561 Week 3 Market Structure and Pricing Power

Jun 28th, 2016
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Select a new, realistic good or service for an existing industry, preferably an industry you current work in or one in which you are interested in working. Develop a 1,400-word evaluation of pricing strategies available producers of your selected product. This will include statements about the market structure and the elasticity of demand for the product, based on text book principles and real world products under development. • Identify the market structure of the industry (monopoly, oligopoly, competitive monopoly). • Determine elasticity of demand for various quality ranges of the product based on textbook theory and judgments about the degree of luxury vs. necessity represented by various brands (e.g. a luxury car vs an economy car). • Determine how pricing relates to elasticity of demand for competing models. • Explain how changes in the quantity supplied as a result of pricing decisions might affect the company's marginal cost, marginal revenue, and market share as production volum

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Running head: MARKET STRATEGIES1Market Structure and Pricing PowerECO/561MARKETING STRATEGIES2In the automobile industry, the market structure used is the oligopolistic structure.Oligopolies are highly similar to monopoly structures, however; they have more than one playercontrolling the economy. Essentially oligopolies have few individual players within an industrythat can effectively cooperate and form a mutual monopoly or at least a framework in the level ofa monopoly. Numerous companies operating within such a structure are referred to as a cartel.An Oligopoly refers to a market largely dominated by few huge suppliers. In this structure, theleading corporations account for a huge percentage of the market share. These enterprisesmanufacture branded commodities, and there is a high level of competition among them whichhas resulted in tremendous spending campaigns towards marketing and advertising.These leading firms have the ability to make abnormal profits in an extended period asnew companies have several entry barriers. All these businesses within the market structure arehighly interdependent as they need to make considerations on the reactions and affects othercorporations as they determine their investment and pricing mechanisms (Berkowitz, 2010).Homogenous products, high entry barriers, few large producers and mutual interdependence aresome of the major elements common in such markets. In the automobile industry, there arenumerous varieties

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