Differentiating between Market Structures Simulation

Running head: DIFFERENTIATING MARKET SUPPLY SIMULATION PAPER

Differentiating Market Supply Simulation Paper

Michelle Hodge

University of Phoenix

Micro Economics

ECO365

Etta Egbe

March 1, 2010

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English: Long-run equilibrium of a firm under mono...

English: Short-run equilibrium of the firm under m...

Economics Perfect competition graph

The simulation entitled 'Differentiating between Market Structures is about a transportation company called the East-West transportation Inc. The transportation company has four divisions that they operate; Consumer Goods, Coal, Chemical, and Forest Products. Each of these divisions operates within four different market structures. The market structures that they operate in are Perfect Competition, Monopoly, Oligopoly, and Monopolistic Competition. In this paper, it will summarize the simulation and give a brief understanding of each step in the decision process.

In economics, markets are categorized according to the structure of the industry serving the market. Industry structure is categorized on market structure variables, which are believed to determine the extent and characteristics of competition. Those variables, which have received the most attention, are number of buyers and sellers, extent of product substitutability, costs, ease of entry and exit, and the extent of mutual interdependence [Baumol, 1982; Colton, 1993]. In the traditional framework, these structural variables are distilled into the following taxonomy of market structures: These four market structures each represent an abstract characterization of a market type (Williams, 2010).

Perfect Competition--many sellers of a standardized product,

Monopolistic Competition--many sellers of a differentiated product,

Oligopoly--few sellers of a standardized or...