Market power refers to the amount of influence that a firm has on the industry in which it operates. A firm with market power would be able to affect price to its benefit. Firms with market power are said to be “price makers” as they are able to set the price for an item while maintaining market share. In a perfectly competitive market firms have zero market power. Individual firms have no control over prices when other firms sell identical or nearly identical products.
These few firms produce either identical or differently products and entry of new sellers is difficult or impossible. In this market the goods produced and sold are homogeneous or differentiated. If only two firms exist in the market, it is called duopoly. Examples of this market include the market of automobile, cement, television and petroleum. Monopolistic: Monopolistic competition is a market structure in which a large number of sellers sale close substitution products.
Advantages of Monopoly. 6. Disadvantages of Monopoly Monopoly It is a market structure in which there is one and only one producer (who produces stuff)/seller( who sells stuff) for a specific product. In different words, the solitary business is the industry. The entry into a market is highly restricted due to highly prices or other obstructions, which can be an economic, social or political.
The three concepts try to explain the behaviour of firms in an oligopoly market. In a market where there is a few number of sellers, firms sometimes behave as if they are monopolies (Yu et al., 2000). They decide on the volume of products that they produce and the prices. In such a market, consumers are the ones that suffer given the fact that they have limited options. Unlike other markets that offers customers a variety of choices such in perfect competition, in an oligopoly market, the customers have limited alternatives (Ledvina, and Sircar, 2011).On the other hand, and producers sometimes have an opportunity of forming cartels and fix desired prices.
Nick Fury, the entrepreneur of this business, should organize his company as a proprietorship rather than a partnership or a corporation. He cannot become a partnership because he is the sole owner, and will receive all of the profits. After that was determined, there were only two options left. If he were to become a corporation, because a corporation is a separate entity from the entrepreneur, then he would have to pay double the taxes than he already has done. Now if he were a proprietorship, the business and the entrepreneur would be considered the same.
The meaning itself is “competition amongst few” It’s is a state of limited competition, in which a market is shared by a small number of producers or sellers. It’s a type of imperfect competition wherein there are few sellers dealing either in homogenous or differentiated products. This is also the most common market structure in most of the countries. Features of Oligopoly are as follows – a. Existence of few sellers - Few sellers dominate the entire industry and influence the prices of each other greatly thus controlling the market.
Arguments for Shareholder Primacy A common argument in favour of the opposing view – Shareholder Primacy – is that shareholders have rights of ownership, and therefore the business should be run in their interests (Stout, 2002). The complete argument is as follows: shareholders are the owners of the company, and it is wrong to use someone’s resources in ways that conflict with their interests (Fried et al., 2014). It is therefore wrong to use a company’s resources for purposes that do not further shareholders’ interests. However, there is a major problem with this argument: there are no legal grounds for the claim that shareholders own companies (Stout, 2002). Since companies are regarded as autonomous legal persons, they cannot be owned by any group of individuals (Heracleous & Lan, 2010).
Sole proprietorship also experience very little government control and few restriction and are taxed differently then many businesses. One of the best things about opening a sole proprietorship business though is the speed and ease at which the business can be started (“The Pros and Cons of a Sole Proprietorship”, n.d.). There are of course problems with having a sole proprietorship business. Owners are 100% responsible for all debts and obligations that the company has. This liability extends to all off the owners assets like their house or cars.
A free market system only hurts the economy, which is why the U.S is a mixed market economy. A mixed market economy is beneficial to consumers due to the fact there is government regulatory oversight of goods, and there is competition for goods. This type of economy means that companies cannot become monopolies and control prices of certain goods. However, this is not the case for pharmaceutical industries because there is little to none government intervention occurring. The lack of government oversight means that pharmacies that only develop specialized medicines have complete control of the price due to the fact they are the only ones able to reproduce the product.
Additionally, as monopolies are the only firm within the market, there is no freedom of entry into the industry. Firms will struggle to enter the market and will be overcome by the substantial control the monopolies have over the industry making it strenuous to be successful in the industry. Monopolies are known price-makers. As they are the only firm people can go to, they have the unique opportunity to charge whatever they wish, as customers will be practically forced to purchase their products no matter the cost. In a purely monopolist market, customers would be faced with much higher prices than what we see in our lives today.