Market Structures

Economic Market Structures

[Institute's Name]Economic Market Structure

Introduction

An economy is classified in the broader meaning of four basic market structures namely perfect competition, monopolistic competition, oligopoly and monopoly. Each structure differs from another as its characteristics rely upon the number of competitors they have and the type of product they are producing. Economists assume that competition in the market determines the price of any product as well as the availability of labor and their wages.

Walmart Wal-Mart Stores, Inc., which is now renamed as Walmart, is a U.S. multinational company specializing in retail, founded by Sam Walton and now headed by his eldest son, S. Robson Walton. In 2005, 20 million customers attending the Walmart on average each day. Walmart is the largest general retailer in the United States with 3500 stores and 20% of estimated market share (Walmart, 2010).

While analyzing market structures, Walmart is the best example of 'Oligopoly; which refers to an industry where a small number of large sellers exist. These sellers are also the predominant buyers in the market termed as 'Oligopsony'.

Market Structure

The industry that Walmart competes in is general merchandising and retailing industry.

Characteristics

Ease of Entry

Entering the market for any business like Walmart is not very easy as retailing and merchandising business much legal formalities and high capital investment.

Competitors

There are a few but large competitors in the market for Walmart, like Kmart, ShopKo Real Canadian Superstore and Sorian.

Control over Price

Walmart has a good grip over its product pricing as it is one of the market leaders and can afford to cut down the margins. Walmart is not just a large seller but also a large buyer as suppliers in contract with the organization rely heavily on bulk purchasing strategy, and thus fluctuations in prices do not bother Walmart when offering discounts and clearance sales. This competitive edge gives fear ...