Business environment Essay Example | Topics and Well Written Essays - 3250 words

Business environment - Essay Example The following graph shows the example of perfect competition Monopoly: Monopoly is totally opposite to perfect competition. In perfect monopoly, only one manufacturer or supplier exists but in reality, such sort of market hardly exists because in such an advanced arena there must be a substitute of each product. There is a dominance of one firm on overall market, such firm can influence prices, lack of substitute, very high barriers to entry (Wilkinson, 2005). Example of such market structure can be a cable company in India, electricity supplier in many countries including Pakistan, and British Telecom. The following graph represents the monopoly market: Monopsony: In monopsony, firmshavethe power to employee factors of production and each firm employee a miniature amount of employees in order to influence the rate of wages. In such market, only one buyer of a particular sort of laborexists. Firms are wage makers because labor has fewer options (McConnell, 2012). Due to the highest bargaining power, firms have lower manufacturing cost and, therefore, largest profit margin.Example of such firms is the electricity generator because it can negotiate a lower price of gas and coal supply contract. Low cost airline gets favorable price for new fleet, food retailers use their bargaining power when purchase items from milk producer, farmer, and other dealers. The following graph shows the example of monopsony market. Oligopoly: In oligopoly, competition exists between few firms. May the industry have the largest number of firms however;few larger firms dominate the overall industry. Firms are liable to manufacture or supply differentiated or standardized products, such firms have to face high entry barriers, have medium power to affect the market price (Wilkinson, 2005). Example of oligopolistic market is the sports apparel industry. Multiple manufacturers exist in sports apparel industry, but some majors like Adidas, Puma, and Nike are dominating the overall