SU Monopolistic Market System Discussion
Description
context:For this week’s discussion, the focus will be on examining Porter’s Five Forces as a tool for looking at the pressure on profits. Specifically, how does Porter’s analysis examine the stress on profits from all directions and all dimensions of a firm’s environment? You will be applying this tool by specifically looking at the market structure in which a firm completes. You will need to be able to distinguish an oligopoly from a monopolistic competitive market structure.Instructions:There are two groups of firms below. Group 1: firms in the retail sector (e.g. Amazon; Wal-Mart; Target; Kohl’s; Sears; Macy’s) Group 2: firms in the wireless services industry (e.g. Verizon; AT & T; Sprint/T-Mobile) (this about telecommunication services, not about the sale of phones) For each group determine and explain if the group is monopolistic competitive or an oligopoly. You need to specific for both in which market structure the firms operate.Then choose one of the firms from one group. Using a Porter’s analysis what are the threat to profitability? This would be a great time to expand your research skills by checking out the firm’s investor relations page. Use the Research Hub. Go to the ECO550 Library landing page and if you need help, Ask the Librarian to help you find the investor relations page.Note: In your discussion posts for ECO550, do not rely on Wikipedia, Investopedia, or any similar website as a reference.
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Case Study Style
Designed for Presenting
Solutions and
Advocating for Policies
ECO550 2021
Case Study Style
In case study style writing you, the author, are the protagonist, the teller of the
story. You are also the expert. It is your job to tell the story in a way that leads
the reader to understand your solution.
Picture yourself as an attorney making closing arguments. What you lead with is:
Ladies and gentlemen of the jury, my client is innocent.
What do you do next: here are the facts to consider
.
Brief, Direct and Use of Active Voice
Presented below is an example of using active voice and case style writing from
the Discussion Preparation for the week 1 discussion on Post-Investment Hold.
Brief and Direct
How to be brief and direct. You dont have to tell the whole story in the first
sentence. Here is what not to do Hold-up arises when part of the return on an
agent’s relationship-specific investments is ex post expropriable by his trading
partner. … Once such an investment is sunk, the investor has to share the gross
returns with her trading partner. This problem, known as hold-up, is inherent in
many bilateral exchanges.
http://www.columbia.edu/~yc2271/files/papers/holdup.pdf
Be brief, post investment hold up occurs when two partied have made an
agreement and one party uses the leverage of the agreement to rob the other
party of the benefit of the agreement.
Brief then Clarify
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who purchased an
airplane ticket to travel from India to England. They begin the trip and the then are held up by
the crew of the plane. Specifically, in a stop in Italy the crew demands extra money to continue
the trip. All the elements of a post investment hold-up are here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provider of the transportation, breaches the contract, to
finish the flight to England, you must pay the planes crew more money or else we do not
continue. Clearly a hold-up
4.
The passengers had to pay-up to finish the trip.
Things to Notice
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who having purchased an
airplane ticket to travel from India to England, are held up by the crew of the plane, in a stop in
Italy, for extra money to continue the trip. All the elements of a post investment hold-up are
here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provide of the transportation, breaches the contract, to
finish the flight to England, you must pay the planes crew more money or else we do not
continue. Clearly a hold-up
4.
The travelers were unable to enjoy the reliance on the agreement. After the agreement
they incurred unexpected cost, an extra payment extorted by the crew to deliver the
flight.
Active Voice: Conclusion
You will agree there is only one possible conclusion. The example of the failed
flight from India to England meets all the criteria for post investment holdup.
There was an agreement. Party A, the crew, breached the agreement. The
agreement involved a very specific service, a flight from India to England.
Parties B, the travelers having relied on and embarked on the trip could not
easily complete the trip if the crew refused to deliver the flight. Their
investment was sunk, gone, not recoverable. Their options, be stranded the
breach, or pay more. They were forced to pay more. One must conclude, one
way to identify post investment holdup is if ones inner-ear hears the words
stick em up!
What You Did, and Did Not, See or Hear
I was the protagonist. I told the story and I never used the word, I.
Use short sentences. Dont try to tell everything up front, break it up and keep
it moving.
You dont have to relate every element of a story to capture the essence of the
story. Be direct. Tell the parts you need to make your case.
Short, direct writing keeps the reader interested. Part of the case study style is
to keep the readers attention via pace.
Use of active voice, you will agree you will know post investment hold-up
when ones inner-ear hears stick em up.
Case Study Style
Designed for Presenting
Solutions and
Advocating for Policies
ECO550 2021
Case Study Style
In case study style writing you, the author, are the protagonist, the teller of the
story. You are also the expert. It is your job to tell the story in a way that leads
the reader to understand your solution.
Picture yourself as an attorney making closing arguments. What you lead with is:
Ladies and gentlemen of the jury, my client is innocent.
What do you do next: here are the facts to consider
.
Brief, Direct and Use of Active Voice
Presented below is an example of using active voice and case style writing from
the Discussion Preparation for the week 1 discussion on Post-Investment Hold.
Brief and Direct
How to be brief and direct. You dont have to tell the whole story in the first
sentence. Here is what not to do Hold-up arises when part of the return on an
agent’s relationship-specific investments is ex post expropriable by his trading
partner. … Once such an investment is sunk, the investor has to share the gross
returns with her trading partner. This problem, known as hold-up, is inherent in
many bilateral exchanges.
http://www.columbia.edu/~yc2271/files/papers/holdup.pdf
Be brief, post investment hold up occurs when two partied have made an
agreement and one party uses the leverage of the agreement to rob the other
party of the benefit of the agreement.
Brief then Clarify
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who purchased an
airplane ticket to travel from India to England. They begin the trip and the then are held up by
the crew of the plane. Specifically, in a stop in Italy the crew demands extra money to continue
the trip. All the elements of a post investment hold-up are here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provider of the transportation, breaches the contract, to
finish the flight to England, you must pay the planes crew more money or else we do not
continue. Clearly a hold-up
4.
The passengers had to pay-up to finish the trip.
Things to Notice
Be brief, post investment hold up occurs when two partied have made an agreement and one
party uses the leverage of the agreement to rob the other party of the benefit of the agreement.
In the week 1 discussion preparation the example is given of passengers who having purchased an
airplane ticket to travel from India to England, are held up by the crew of the plane, in a stop in
Italy, for extra money to continue the trip. All the elements of a post investment hold-up are
here.
1.
The investment, air transportation from India to England is a contact with specific use, i.e.
travel from point A to point B
2.
The two parties agreed to the terms and relied on the agreement to set out on the trip.
3.
Part way through the trip the provide of the transportation, breaches the contract, to
finish the flight to England, you must pay the planes crew more money or else we do not
continue. Clearly a hold-up
4.
The travelers were unable to enjoy the reliance on the agreement. After the agreement
they incurred unexpected cost, an extra payment extorted by the crew to deliver the
flight.
Active Voice: Conclusion
You will agree there is only one possible conclusion. The example of the failed
flight from India to England meets all the criteria for post investment holdup.
There was an agreement. Party A, the crew, breached the agreement. The
agreement involved a very specific service, a flight from India to England.
Parties B, the travelers having relied on and embarked on the trip could not
easily complete the trip if the crew refused to deliver the flight. Their
investment was sunk, gone, not recoverable. Their options, be stranded the
breach, or pay more. They were forced to pay more. One must conclude, one
way to identify post investment holdup is if ones inner-ear hears the words
stick em up!
What You Did, and Did Not, See or Hear
I was the protagonist. I told the story and I never used the word, I.
Use short sentences. Dont try to tell everything up front, break it up and keep
it moving.
You dont have to relate every element of a story to capture the essence of the
story. Be direct. Tell the parts you need to make your case.
Short, direct writing keeps the reader interested. Part of the case study style is
to keep the readers attention via pace.
Use of active voice, you will agree you will know post investment hold-up
when ones inner-ear hears stick em up.
Thread: Week 4 Discussion Managerial Economics & …
10/25/21, 7:20 PM
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PHYLLIS ISLEY
Week 4 Discussion
posted 1 year ago (last edited 23 days ago)
Overall Rating:
Context:
For this week’s discussion, the focus will be on examining Porter’s Five Forces as a tool for looking
at the pressure on profits. Specifically, how does Porter’s analysis examine the stress on profits
from all directions and all dimensions of a firm’s environment? You will be applying this tool by
specifically looking at the market structure in which a firm completes. You will need to be able to
distinguish an oligopoly from a monopolistic competitive market structure.
Instructions:
There are two groups of firms below.
Group 1: firms in the retail sector (e.g. Amazon; Wal-Mart; Target; Kohl’s; Sears; Macy’s)
Group 2: firms in the wireless services industry (e.g. Verizon; AT & T; Sprint/T-Mobile) (this
about telecommunication services, not about the sale of phones)
For each group determine and explain if the group is monopolistic competitive or an oligopoly. You
need to specific for both in which market structure the firms operate.
Then choose one of the firms from one group. Using a Porter’s analysis what are the threat to
profitability? This would be a great time to expand your research skills by checking out the firm’s
investor relations page. Use the Research Hub. Go to the ECO550 Library landing page and if you
need help, Ask the Librarian to help you find the investor relations page.
Note: In your discussion posts for ECO550, do not rely on Wikipedia, Investopedia, or any similar
website as a reference.
To earn full credit you need one direct response to the questions asked and at least on reply to
another post.
Reply
23 days ago
PHYLLIS ISLEY
RE: Week 4 Discussion
Overall Rating:
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Page 1 of 4
Thread: Week 4 Discussion Managerial Economics & …
10/25/21, 7:20 PM
Dr Isley’s Discussion Starter
In this discussion we are really examining the degree of monopoly power in a market. There are no
monopolies in the cases you are presented, but there are di?ering degrees of monopoly power.
That is the distinction that one is making when determining whether firms operate in a monopolistic
competitive environment or an oligopoly.
H
To navigate this discussion it is very important to be precise in the use of terminology. Like any
discipline economics involved making precise distinctions. A firm that is monopolistic competitive,
is not a monopoly and cannot be said to be ‘monopolistic.’ The term monopoly means precisely
what is say, one and only one firm in a market producing with no close substitutes available and
high barriers to entry.
DISCUSSION BOARD
Khrystal Pinckney
29
A duopoly, we will look at duopoly behavior in week 6, is a market in which there are two firms
competing
and they produce similar products. Oligopolies are a direct extension of this duopoly
FORUM:
WEEK 4 DISCUSSION
MANAGERIAL
market, but there are a few firms that compete and they sell similar products. In an oligopoly there
are significant barriers to entry.
THREAD: WEEK 4 DISCUSSION
ECONOMICS
&
Monopolistic competitive markets have lots of firms all of which produce similar products and there
are much lower barriers to entry than in an oligopoly.
There are two factors needed to determine market structure, number of firms and the degree of
GLOBALI
barriers of entry. In your discussion of the groups presented, try to address both. I have added two
very helpful videos to help you with this discussion.
ECO550121VA0161218001
If you have question, let’s talk.
Dr. Isley
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8 days ago
Elbert Grigsby
RE: Week 4 Discussion
Overall Rating:
Porter’s analysis examines the stress on profits from all directions and all dimensions of a firm’s
environment by encouraging firms to look beyond the actions of their competitors and discuss
what other factors could impact the business environment. Factors like Competitive Rivalry,
Buyer power, Supplier Power, The Threat of Substitution, and The Threat of New Entry. These
factors can make up the competitive environment and can erode a firm’s future profitability.
In Group 1: Firms in the retail sector (e.g. Amazon; Wal-Mart; Target; Kohl’s; Sear; Macy’s), these
firms are monopolistic since their products and services are the same but not perfect substitutes.
In Group 2: Firms in the Wireless Service Industry (e.g. Verizon; AT & T; Sprint/T-Mobile) belong to
Oligopolistic competitions because these firms are in small numbers that dominate the entire
market. They are tremendous in terms of profit, size, and profit.
Firms in the Wireless Service Industry (e.g. Verizon; AT & T; Sprint/T-Mobile) A significant
characteristic of these firms in an industry is the various uses of “non-price competition.” This
form of competition focuses on strategies other than price to win customers and increase
profits. In an oligopoly, the leading players are incentivized to collude and keep costs higher as
high prices translate to higher revenue for all the players. Prices might increase, and consumers
will be paying more.
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Thread: Week 4 Discussion Managerial Economics & …
10/25/21, 7:20 PM
6 days ago
April Gaines
RE: Week 4 Discussion
Overall Rating:
The retail sector firms are operating in a monopolistic competitive market structure. The market is
characterized by having many firms selling di?erentiated products. The market also has many
buyers. Although Amazon may be having a sizeable market dissect it does not have monopolistic
behavior. That it cannot inform the entire market decision as the other firms pose serious
competition. The market has low barriers to entry.
The telecommunication sector falls in the oligopoly market structure. That is because the industry
has few firms that significantly influence the market. They exhibit instances where the decision of a
single firm will influence the decision of rival firms.
Amazon tends to dominate the retail sector even if it faces threats from large and small competitors.
Due to growth in its e-commerce business, it reveals numerous external forces that threaten its
profitability. Based on Porter’s this following forces will have an impact on its profitability:
1. Competition. The firm faces competition from small retailers and large retailers like Walmart.
This competition will a?ect the sales volume and hence profitability.
2. Bargaining power of consumers. They hold overwhelming force in the e?ect that they will
influence sales revenue hence profitability.
3. The threat of substitutes. In peddling in attendance exist numerous substitutes both of
products but also suppliers.
4. Bargaining power of suppliers. Suppliers hold the power of influencing sales expenses by
a?ecting the price upon which they sell their products to Amazon.
5. Relatively weak force as Amazon occupies a strong position in the market due to its
elaborate online presence.
Using Porter’s model to analyze Verizon identifies the following forces threatening its profitability.
Competitive rivalry. The telecommunication sector has many players who pose competition to
Verizon. They have an intense force on the company’s profitability.
1. Bargaining power of consumers. Verizon consumers have a moderate force on its
profitability.
2. Bargaining power of suppliers. They have a moderate force.
3. Threat to substitution or substitutes. Even if the industry has many players, Verizon still holds
a considerably strong position from this replacement clasp exerts moderate force.
4. The threat of new entrants. The industry poses massive barriers to entry. That will make new
entrants have a weak force.
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5 hours ago
Samantha Lewis
RE: Week 4 Discussion
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Thread: Week 4 Discussion Managerial Economics & …
10/25/21, 7:20 PM
Hello Dr. Isley and Classmates,
Week 4 Discussion:
Group 1 is Monopolistic competitive and Group 2 is an Oligopoly.
In Group 1: (Amazon; Wal-Mart; Target; Kohl’s; Sears; Macy’s) are all examples of
monopolistic competitive market because these are a variety of online marketing firms
in the retail sector. For example, there are a lot of retailers on Walmart, Amazon etc.
who provide large number of products and services to its customers. These firms have
complete control over prices. They can adjust the market price as and when required.
They can lower the prices of their products and these industries are competitive in
nature. Whereas,
In Group 2: Firms like (Verizon; AT & T; Sprint/T-Mobile) are all examples of oligopoly
because these firms are few in number and have dominance over the wireless telecom
service industry. These industries are large in size with a huge profit base. Such kind of
firms offer similar kind of services keeping the price levels same. These companies try
to attract more customers in order to increase their level of profits for greater revenue.
Using Porter’s analysis, the threat to profitability of Amazon are:
1. Amazon has sustains huge cost on the management of its brand and customer
support. Here, the threat is that sometimes the investment is even higher than the
profits which may affect the profitability of Amazon.
2. While shopping online, most of the customers are price sensitive because their
motive is to shop the best products at affordable prices. If the prices are set
according to the convenience of the customers, they may shift to other online
shopping firms in the retail sector. This would negatively affect the profitability of
Amazon due to large number of its substitutes as it is a monopolistic competitive
firm. This may drift the consumers away from Amazon if they find similar products
at lesser prices with other retailers.
3. High rivalry in the online shopping industry may give tough competition to
Amazon which may be a major threat to its profitability.
Therefore, Porter’s analysis can help to track the profits of a firm and can also make us
understand a firm’s business environment. By applying this tool, we also get to know
the exact market structure in which both the groups i.e. Group 1 and Group 2 operate.
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