The Cola Oligopoly

Essay by pinchetteUniversity, Bachelor'sA+, November 2006

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This project focuses on the results of a market structure simulation and a product I am familiar with. I am to discuss the advantages and limitations of supply and demand that are identified. I am then to create a table showing the differences and then I am to discuss a product we are familiar with so I chose the soft drink/cola industry.


This project focuses on the market structure of a freight transportation company. They go through several changes for each of their divisions. Each division represents a different market structure. I will learn about perfect competition, monopoly, monopolistic competition, and oligopoly. The divisions used in the simulation are the Consumer Goods Division, Coal Division, Chemicals Division, and Forest Products Division.

What are the advantages and limitations of supply and demand identified in the simulation?

The company of East-West Freight Transportation consisted of four differnet divisions that represented different market stuctures as shown in the following table.

There were advantages to the supply and demand in different scenarios. The coal division was the only transporter in the region and the chemicals division has a chance for profits in the long run. The consumer goods division has no barriers to entry for firms and the forest products division has very little to no presence of economic profits.

Simulation Table

Example of a firm Barriers to Entry Numbers of Firms Price Elasticity of Demand Presence of Economic Profits

Perfect Competition Consumer Goods Division No barriers Several Price is elastic P=MR.=MC

Monopoly Coal Division Only transporter in region 1 Price is inelastic Possible is barriers exist

Monopolistic Competition Forest Products Division Few barriers to entry Many Price is elastic None

Monopoly/Duopoly Chemicals Division Only two firms and each reacts to each other. East-West to Far Wide. 2 Price is elastic Some...