Market Structure Essay

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Economics Assignment 1 – Market Structure (1) Monopoly is meant a firm produces all of products in the market. It is the extreme point of market structures. It is the least competitive of market structure. It is the single supplier in the market. Therefore, the monopolist faces no competition in the whole market. The monopolist can influence the market price, which is called ‘price marker’. Actually, in fact, there is no pure monopoly. In the real world, the legal definition of monopoly is the firm has 25% or above of the market share. The firm able to have the monopoly power, it is called monopolist. According to the passage, ‘Sega and Nintendo both Japanese companies, dominated the UK market with Sonic, the Hedgehog, and Super Mario Brothers using 16 bit consoles. Sega had 38% and Nintendo 25% share of the UK market. Thus, both of Sega and Nintendo are contain 25% or over the market share. They were containing the monopolist powers which are monopolists. They can ‘barriers to entry’ to maintain monopoly in the market. “‘Barriers to entry’ is defined anything that prevents or impedes the entry of firms into an industry and thereby limits the amount of competition faced by existing firms.” [Sloman J., Economics sixth edition, P166] They have the large scale advertising expenditure, a well known brand name and a good reputation. They can make difficult for a new company to entry the market. Also, the costs of the new company to entry the industry are expensive. It is because of Sega and Nintendo have large economies of scale. The new company will find difficult to build up the technique, software and hardware. In this case, Sega and Nintendo contain the only source of special raw materials, which are the blank tapes. They can control the market with the franchise, patent and copyright. Therefore, the third parties need to have a license to buy the blank

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