The existence of the different market structures is determined by the various factors in the business environment. Thus, firms operate in different market structures. The market structures are influenced by particular conditions that relate to prices and output. In order to determine the various types of market structures, the following factors must be considered. The factors include the number of firms in the markets, degree of competition for similar products, firm’s control over the prices, ease of firms entering and leaving the industry, and the levels of non-price competition (Mc Eachern 67). There are four basic market structures obtained from the named factors that include perfect competition, monopolistic competition, oligopoly and monopolies.
The perfect competition has salient features that differentiate it from the other market structures. The features in the firms are price takers, offers similar products, there are many sellers and buyers, many producers providing uniform products, non-price competition strategies, and ease of entering and exiting the markets. On the other hand, in monopolistic competition there are many firms, production of similar and identical products, large firms in the markets, ease of starting new firms, and none- price competition strategies. While Oligopoly markets structure is dominated by few, but large firms, barriers to entry, slight price variations, differentiation of the products, and non-price competition strategies (Gottheil 48). The Blackberry industry provides cellular phones among the wide global consumers. The Blackberry industry is an example of the oligopoly market structure. In the Blackberry industry, there are very few major plays that include T-mobile, Sprint-Nextel, and Verizon among others. The firms provide identical and close substitute products in which the specific models may vary from one company to another. The blackberry industry is also characterized by non–price competition strategies. The firms use other strategies other than variations in their prices. The various companies in the mobile industry have focused on innovation strategies to infleucne competition.
The Blackberry industry has few players and it targets the large generation of young people in the works. Today, the evolving of the mobile phones propels the oligopoly market structures. Blackberry faces stiff competition from the mobile phones brands. The few oligopoly firms are able to control the pricing strategies of products in the market. With this in mind, competition in oligopolistic industries tends to identify itself in non-price forms, such as advertising and product differentiation. The group behavior both evident as well as imperative to oligopoly to reach recognized success must in fact recognize their interdependencies. Generally, there are no firms that considers the decision of other firms in relations to price and output strategies. Prices tend to be rigid and inelastic. This refers to the evaluation of the instantaneous aspects retaliated by the competing aspects. As a result, the oligopolistic nature leads to price-cuts that affect the decision of price and output in the industry.
The impacts of price rigidity emerge from the presence of few sellers in the markets. In terms of oligopoly markets, there are low prices compared to the monopoly aspects in the industry. The setting up of the pricing policy is mutually interdependent on the firms present in the industry. Thus, any actions taken by one firm affects the other firms in the Blackberry industry. For example, if Samsung adopts a strong marketing strategy for its Smartphone, Blackberry will need to develop counter strategies to manage the competition. This creates a dilemma among the oligopoly forms on where to compete or cooperate with each other. However, if there were competitions, the industry could face strong competition processes and strategies by each firm. In addition, it is very different for companies to enter into the industry due to the presence of high entry barriers. The current oligopoly firms set prices in order to reduce revenues for the new entrants. As a result, it leads to negative effect on the telecommunication firms by hindering new firms since the oligopoly firms are keen on protecting their market shares by monitoring the market prices. Most importantly, the oligopoly firms can use after sale services to expand their markets. The marketing strategies are relevant in the diversification of the services to create higher revenues. The Blackberry lies along oligopoly market structures that diversify and expand their services to create high revenues. The oligopoly firms also consider the inherent economic conditions.
The market structure has few sellers that show the number of Blackberry manufacturers in the industry. In the same time, the few sellers have a large number of customers waiting to buy the Blackberries in the market. In addition, the Mobile companies operate interdependently. It relates to the decisions made by others, which may influence the other company to adjust their policies. Blackberry industry incurs increased advertising and selling expenses. The companies follow the strategy approach of advertisements in order to improve sales. The firms also use additional costs incurred as barriers for the entry of new firms in the industry (McEachern 231). Costs add to the major barriers that keep companies from joining oligopolies. Various barriers include patents and actions of the businesses in the oligopoly themselves.
Considering the nature of the Blackberry industry, few firms existing in the industry offer identical products in the same geographical locations. This relates to the ability of the companies to expand demands among the society. As a result, the oligopolies are able to limit competition costs in order to protect the society. Blackberry industry, as an oligopoly market structure has significant impact on the profits obtained by the firms in the industry because the prices of products can be higher than the fair market value. The industry relies on customers to purchase their products and services for profound effects. It also considers the customers with no discretional incomes to develop appropriate budgets. However, the oligopolies have minimal incentives and thus, it leads to fewer improvements and productivity. The form of market structure limits the competition faced by the firms in the current markets. In addition, Blackberry industry can form cartels that assist in reducing the prices and competition in the industry.
The price levels of the products remain level in the oligopoly market structure, as the few sellers agree on certain range of prices depending on technology to sell their products. Under the oligopoly markets, the prices of the products and services are usually rigid. Prices tend to be rigid and inelastic. In the occasion of firms reducing their prices, the competing firms will institute certain strategies to overcome the practices. This leads to the price competitions in the oligopolistic requirements (Gottheil 45). Therefore, the Blackberry industry fits well in the oligopoly market structures.
Gottheil, Fred. Principles of economics. Boston, MA: Cengage Learning, 2013. Print
McEachern, A. W. Economics: A contemporary introduction. Boston, MA: Cengage Learning, 2012. Print