Differentiating_Between_Market_Structures

Running head: DIFFERENTIATING BETWEEN MARKET STRUCTURES Differentiating Between Market Structures Team Paper Team A: Dorothy, Kimberly, Leon, Louise, Tavitha University of Phoenix ECO/212 Gampi Shankar May 31, 2010 Differentiating Between Market Structures Team Paper In order to differentiate between market structures, the first thing to do is define market structures. A market structure in regards to economics is known as the number of firms producing identical products. The four market structures that were researched on the table are perfect competition, monopoly, monopolistic competition, and oligopoly. Each one can tell if a business is in a large firm or a small firm, and it can also show the demand for the product that the firm is marketing. This paper will compare and contrast, public goods, private goods, common resources and natural monopolies. It will also discuss how supply and demand affects labor market equilibrium. Microsoft is an organization that affects labor supply and demand. The public good is in nothing more essentially interested, than in the protection of every individual's private rights” (William Blackstone, English Jurist, 1723-1780) Blackstone refers to moral responsibility in this quote, but the underlying meaning is the same when products and services, like national defense or public fireworks displays are allocated to the public by the government to make sure that no one is excluded from these services. These goods are non-rival because everyone has the same opportunity to have them, (Public Goods, 2004) whereas private goods are available to those who can pay for them, making them rival in consumption and excludable. (Wiley, 1995) Common resources like clean air, water, and parks are similar to public goods in that they are free to everyone (Stern, 1978). Protection of these resources however, sometimes involves payment by the public in the form of taxes to the government. Natural monopolies are also goods that are necessary to the public, like refuse collection, but if not kept in check by the government, will turn into a financial burden to the public, so like public goods, government steps in to ensure that there are competitive markets for such services (Natural Monopolies, n.d.) Explaining how labor market equilibrium is affected by the supply and demand of labor is simple when you are just talking about production vs. employment. Demand is the companies that need to hire employees, and supply is the people needing to acquire employment. This works together with the labor market equilibrium if the production is high then the demand for workers will be high, that is if they wages are appropriate. The labor market equilibrium will rise when the quantity and the demand are high. Here is an example: Wal-mart is a big corporation, and they employ anywhere from 150 to 350 associates, and the demand for this many employees comes from the consumers. There are quite a few customers Wal-Mart deals with on an everyday basis, the demand for labor is high, and the supply for hiring associates is finding suitable employees, or enough to fill all the shifts required to run a successful business. The labor market equilibrium is higher than most firms pay. The opportunity for people is there, they just have to apply themselves. In the long run, the labor equilibrium is how we determine what we need to do for the supply and demand. Figure out what the consumer need is, and as a company try hard to meet that need and still make a profit. Microsoft can be considered a monopoly is some cases. If you look at Microsoft as just a software company then they are not a monopoly. However, if you just look at the operating systems, then Microsoft controls 90% to 95% of the operating systems market. This would then classify Microsoft as a monopoly. This is a very good market structure for Microsoft. The company can use their power to determine what price they can charge for the Windows system. In addition to this, Microsoft uses its power to bundle Windows on the companies that make PC’s. This means a company that makes PC’s has Windows operating system on them and if a person wants a PC, they have to buy the operating software and use it. Secondly this means that when Microsoft creates a bad product, the company has no reason to rectify the problems the operating system has because there are no close substitutes to replace the Windows software with. This has happened when Microsoft came out with Windows Vista. The Vista program did not work well; it was very slow and had a lot of stuff on it that most people thought was useless. It took years for Microsoft to decide to make a better product by replacing Windows Vista with Windows 7. By being able to have PC’s come with Windows operating system, having no close substitutes and controlling over 90% of the operating software market, this does classify Microsoft as a monopoly. There have even been many lawsuits filed against Microsoft for being a monopoly in other areas of the software market, such as the digital media market. Many people know Microsoft as just a software company, but as we have shown, there is much more to Microsoft than just monopolizing the software industry. If you actually think about it laptops and notebooks are in high demand right now, and some type of Windows product is attached to the operating system. There are commercials all over the television about the newest version, Windows 7. It took trial and error with Windows Vista to get them to create the new program, and yet it made the demand for the new product high, which in return makes the labor supply and demand rise as well. In conclusion, labor supply and demand for any firm all depends on the consumers need for the firms’ product or service; in this case it is Microsoft. The Microsoft Company is more or less considered a monopoly. The firm has the status and solidarity to re-write the software industry and dominate it with a superior product that is used in almost every household, business, and new computer product sold to date. Personally I use Windows Vista and not Windows 7, I have no issue with the product and yet, I still want to go and purchase a different laptop that is equipped with Windows 7. When thinking of a firm from now on, take a moment to think of what kind of market structure it is, and if it were possible to create a superior product or service that would make yours better than the firms you are thinking of, it does not hurt to dream big. You never know, someday you may have a company that is as big as Microsoft. References Stern, P. (1978). When do people act to maintain common resources' Are formulated psychological question for our times. International Journal of Psychology, 13(2), 149.Retrieved from Business Source Complete database on May 28, 2010. Dictionary of Economics, Wiley. (1995) Retrieved from http://www.credoreference.com/entry/wileyecon/private_goods N.d. Natural Monopoly, Retrieved May 30th, 2010 from XRefer XMLdatabase (2004). Public Goods, In The Encyclopedia of Public Choice. Retrieved from http://www.credoreference.com/entry/sprpubchoice/public_goods Cuellar, S (April 2000). Is Microsoft a Monopoly' Retrieved on May 30, 2010 from http://www.sjsu.edu/faculty/scuellar/Msft.pdf Evers, J and McMillan, R (December 2003). Real sues Microsoft, alleges monopoly abuse. Retrieved on May 30, 2010 from http://www.computerworld.com/s/article/88426/Real_sues_Microsoft_alleges_monopoly_abuse