Commercial Aircraft Industry Essay Example | Topics and Well Written Essays - 2750 words

Commercial Aircraft Industry - Essay Example This tells just how competitive an industry really is. A market structure defines the condition of a prevailing market and identifies how it is made up in terms of Perfect Competition: Large number of firms, with homogenous products, characterizes this and therefore there is no specific preference by the consumer for the product. The barriers of entry are low and so competitors exit in and out of the market. Since there is myriad options for the customers, prices are set by customer demand. Consumers and suppliers have a complete knowledge of the market. In an ideal scenario, a perfectly competitive market on one extreme balances a monopoly on the other. In reality, no such thing as a true perfectly competitive market exists. Let us now consider the other popular types of market structures, monopoly, oligopoly, and monopolistic competition. Monopolistic Competition: Monopolistic competition is a market structure in which many companies operate independent of each other in an industry. In monopolistic competition, there are too many companies and so the primary aim is to attract customers to one's own product specifications. In monopolistic competition due to the large number of firms, the companies can enter the market relatively easily since the barriers of entry are less, although more compared to perfect competition. This makes profit margins low due to the long-term equilibrium Due to the competitions; firms drop prices in order to expand volumes. Monopolistic competition has a normal downward-sloping demand curve. The competing companies in monopolistic competition are forced to vary the price rather than set a stable price and hold it. In monopolistic competition, there are many firms vying for control of one market. Each firm offers a different type of product or differentiate their product to achieve that edge in marketing of their products. Differentiation is a necessity to attract consumers by a parameter beyond the price. Monopoly: A monopoly is a market structure in which, there is only one company that operates within the industry. This generally does not exist, since substitutes in some form emerge usually. Unregulated monopolies with no government ties can generally do whatever they want. After all, there is no one else to offer a different sort of service or a different price. Monopoly may be characterized by high influence on prices and output. Barriers of entry are high and pricing strategies are employed to stifle competition. Monopolies are achieved by being the first in the field, by mergers and acquisitions or being a patent holder or by nationalisation. Complacency may be an issue due to the lack of competition, rendering it inefficient and consumers may be affected by the high pricing power of the firm. Oligopoly: An oligopoly is a market structure in which there are a small number of interdependent companies in the industry. In oligopolies, there are few companies so if you were a company and you made some sort of decision, it will