Market Structure

Running head : MARKET STRUCTURE

Introduction

Different market structures require appropriate market interventions to increase profitability or to retain existing market shares . A monopolistic market is advantageous in that the monopolist is able to manipulate certain aspects of the market . However the dynamic nature of global economy is such that such monopolies quickly evolve from a monopoly to an oligopoly and finally emerge as a perfect market Whereas in the previous two market structures the manufacturers could determine the market price , perfect competition is characterized by falling prices as a result

of innovations aimed at cutting costs . Those firms unable to reengineer their production processes to lower overhead costs end up shutting down . By employing various variables like price advertising and product innovation , a firm is able to ensure profitability through the various stages in the life cycle of a product .Strategic Variables and Profitability

In the initial stages of product lifecycle , a firm may enjoy monopolistic status due to patents and technological advantages . At this stage , the firm should try to maximize profits by pricing the product at a point where the average volumes without necessarily decreasing the price . Adverting plays a major role in promoting sales and increasing the budget for this variable will contribute to higher demand

With the entry of a few other firms into the market , the monopolist stage evolves into an oligopolistic structure . This scenario is characterized by...