Pricing Strategies Across Different Market Structures

Pricing Strategies across Different Market Structures
Abstract
The analysis of the four diverse market structures mentioned in our book is detailed in this
research. In this study, the single market and accompanying pricing strategies for full
competition, monopolies, oligopolies and monopolies are further investigated. "A company
needs to adjust its pricing approach to its particular competitive environment" as Griffith and
Rust (1993) eloquently summed up. Since each market structure is different, each price
strategy is different for its items. Burger Kings explains the relationship between every price
strategy and several market structures in addition to a case study based on quick-food
business.
Description of Perfect Competition
According to Khan Academy (2019), a hypothetical extreme is an absolutely competitive

market. Technically, there is no perfect competition, but it establishes an industry benchmark
in competitive markets. As an example of the closest industry to a perfect competitive market,
agriculture is often used by a huge number of competition and the product is nearly the same
in each enterprise. The four conditions for Samuelson & Marks (2015) are usually excellent
competition in our textbook: For a market composed of a huge number of customers, several
companies provide good or service. No obstacles to market entry for new companies. All
companies manufacture and sell the same things. Companies and consumers are finally
described as pricers. (Marks & Samuelson, 2015) Adam Hayes (2019) defines price-takers as
persons or businesses that must accept dominant market prices without a market share to
influence market prices on their own. Preising and ideal competition were ultimately a
synonym for perfect competition and prompted us to conclude that perfect competition was
an unpleasant environment for market ingenuity. (Makowski and Ostroy, 2001) 2001
Pricing policies
Unfortunately, individual pricing methods cannot exist with full competition, since only
supply and demand can decide prices. "We have no control over the price as each company
just claims a very low market share." (Marks & Samuelson, 2015) Each company therefore
accepts the controlled market price. "Through increased output, completely competitive
companies will react to earnings. By cutting out output or leaving the market, they will
respond to losses." (Khan Academy 2019) Khan Academy
Description of monopoly competition
Monopolistic competition has a combination of perfect competition where all companies

supply the same products and a monopoly where a single company sells a single product. The
key difference is the differentiation of the product characterised by competing companies
selling products that are somewhat different. (Marks & Samuelson, 2015) The monopoly
competition is a model of an industry where companies provide like products, but not
perfectly alternatives, Jim Chappelow (2019) argues. Some sectors such as restaurants, hotels
and other consumer services companies are regarded as monopoly competition as their
products and services are not accurate duplicates. The competitive monopoly industry focuses
on the following characteristics: Many entering and leaving enterprises and distinguished but
comparable items. (Encyclopedia, 2012) Pettinger (2018) continues to demonstrate that
businesses have inelastic price demand; they become price makers since it is strongly
distinguished from its competitors. The above normal profits which can be gained leading to
increased entry of new enterprises into the industry are another element that will be explained
more deeply into the monopoly competition pricing plan.
Pricing policies
Monopoly competition is limited, especially because of the pricing techniques in the

business. One significant restriction is the distinguishing of brands, where recognition of
brands generates revenues above normal because of recognised distinctions in quality. A
company could establish a higher pricing due to the brand differentiation, knowing that the
consumers pay more on their recognised product. (Encyclopedia, 2012) Tejvan Pettinger
(2018) further restricts the absence of a direct brand loyalty for a number of new companies
in the market and the prospects for their price strategies can be decreased. Roy Ruffin (2009)
reveals through the following statement the economics of monopolic competition. "People
have a love of variation expressed in substitution flexibility. The more elastic the replacement
is, the less the love of variation. Consumers would be indifferent between the two products
with an infinite elasticity of substitution: practically no passion for variation. The higher your
love of diversity, the less flexibility and, thus, the less elasticity of demand."
Local convenience is one of the most important aspects in monopoly pricing strategy. The
manual shows the retail sector as an example. Despite distinct shopping size differences,
stored product brands and customer service consider the location to be a significant element,
both customers and manufacturers believe. In turn the convenience of the location is less a
factor than the services given when talking about more personalised services.
Oligopoly \sDescription
An oligopoly is a single market structure where two or more companies compete on a given
market, although so few companies are participating that everyone can benefit more than
what is earned in the competitive industry. (Ruffin, 2009) (Ruffin, 2009) Every company's
actions immediately affect the industry's earnings and create severe economic barriers to the
market entry of new companies. "The business and legal concerns are that a delayed
innovation and price growth, all of that damaging consumers, can be impaired by an
oligopoli." Oligopoly, 2019, Chappelow. Jim Chappelow (2019) highlighted the past
oligopolies industry as makers of steel, oil firms and the railways. As a case-by-case
illustration of the current oligopoly market, Samuelson and Marks (2015) provide the
aviation sector with. The financial size of the Boeing and Airbus aircraft manufacturers
creates significant economic obstacles for new competitors and stronger competition, and
they may set prices within their own markets.
Pricing policies
In particular, oligopolies have specific pricing methods. As stated in the textbook, the
oligopoly rivalry is complicated by the fact that each company has an impact on the
profitability of its competitors in terms of output, pricing and advertising. (Marks &
Samuelson, 2015) Either the oligopoly businesses can produce competitive price wars or
pricing can happen on the market. Price setting is done when the industries interact and the
group creates a cartel. "To keep the price that everyone receives high enough to capture
economic rents by customer, all cartel members can collectively gain themselves by
restricting output." " Oligopoly (Chappelow, 2019)
Monopoly \sDescription
In the period of free market capitalism, a monopoly is a theoretical construction. A company

which controls the entire or most of the single market creates an unfair advantage due to the
absence of obstacles to entering the market. Monopolies "Monopolies can simply hinder
competition by acquiring competition from developing their footprint in a sector." (Chile,
2019) Monopolies are price makers and, because to a lack of competitiveness, total freedom
to create prices for the industry. Another feature of a monopoly corporation is that they are
able, because their economic Portfolio enables them to buy their stocks in enormous
numbers, to create their goods on a lower price than a competitive market. (Translated from
Kenton, 2019) Because of their massive size and market dominance in their respective
marketplaces, Microsoft, Wal-Mart and the United States Postal Service (USPS) have been
seen as monopolies based upon the economic idea. (Simpson, 2010) Simpson Natural
monopolies are electrical enterprises and other forms of utilities. Natural monopolies are
typically government regulated and are characterised by the lack of a replacement product
and service.
Monopolies of anti-trust law and other government controls are rare in America but
monopolies are more common in other economic and political systems globally. "Chinese
new anti-monopoly law bans abuse of administrative authority to restrict competition,"
asserted Eleanor Fox (2008), who writes for the Antimonopoly Journal. The authorities to
implement these abuses, however, are so feeble that the endeavour is almost undermined." In
other nations, most monopoly industries are state-owned and are permitted to exist.
Pricing policies
Monopolies and the right competition are, respectively, price makers and price makers at the
opposing extremities of the price spectrum. Monopolies are able, depending on the situation,
to deploy many various techniques and competitors who try and enter the market to maximise
profits. Janet Hunt (2019) stated que el precio del mercado est determinado primero por la
demand del product o del servicio, pero encontrar el nivel correcto de la producción para
maximizar los beneficios. Price discrimination is another pricing method used by
monopolies. Discrimination against prices is done when a corporation sets different prices for
different parts of the market, although the expenses are identical for each client group.
(Marks & Samuelson, 2015) Pettinger (2019) states that when companies sell the same good
at distinct consumer groups, pricing discrimination arises. An example of pricing
discrimination is the Internet service provider charging residential consumers at different
costs as compared to commercial clients.
Study of King Burger Case
This case study, which focuses on Burger King, will dive into the correlation between its
industry and the pricing tactics it uses in various market structures. With many firms, the fast-
food industry is highly competitive and a monopoly competition. As already indicated in the
research, the monopoly competition is marked by many companies, but either the brand or
the quality of the product is somewhat different. Burger King's fast food industry, too, can be
defined as an oligopoly by controlling the few enterprises with a global influence. Earlier in
the study Jim Chappelow (2019) explained the market of oligopolies and examined the
market easy restrictions, which are characteristics of the dominance of Burger King and
McDonalds.
The restaurant sector and fast food industry in general are different from other industrial
sectors since, because of geography and quality vs prices, consumers usually prefer one fast
food firm over another. The asymmetrical competitive strengths of the Burger King and
McDonalds are consequently focussed on the diversification of products and appropriate
product positioning to appeal to their customers. (Philadelphia, 2007) The pricing approach
of Burger King, together with McDonalds, is based on demand circumstances and is the price
determiner of the industry. Burger King and McDonald's were part of the pricing battle a few
years ago when Burger King dropped one of its products' prices to compete with McDonald's
dollar menu, according to Richard Gibson of the Wall Street Journal (2007).
While the small differentiation of products is the greatest variance in the fast-food market,
advertising is essential to differentiate between them. Christina Majaski (2019) builds up the
technical monopoly of both fast food trailblazers on the own trademarked product. Burger
King has a stronghold on the Whopper sandwich, while McDonalds owns the classic Big
Mac. The value proposition of Burger King continues to be consistent since it applies
different price tactics between monopoly and oligopoly markets.
Conclusion
Price policies differ across every structure of the market. Perfect competition, due of various
market variables, is an unattainable structure and is defined as price-takers. The primary
market structure for most companies is monopolistic competition. Monopolies are the reverse
of perfect competition because pricers and oligopolies are particularly rentable as a result of
the small number of companies and the enormous economic obstacles to market access. Each
market structure essentially has its own pricing strategies and some sectors are hybrid of
many market structures, as illustrated in the case study.

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Pricing Strategies across Different Market Structures

Description of Perfect Competition

According to Khan Academy (2019), a hypothetical extreme is an absolutely competitive

Description of monopoly competition

Monopolistic competition has a combination of perfect competition where all companies

Monopoly competition is limited, especially because of the pricing techniques in the

In the period of free market capitalism, a monopoly is a theoretical construction. A company

Study of King Burger Case

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