Market Structure Differentiation

Market Structure Differentiation from Economics 365.

Differentiating Between Market Structures Simulation

ECO/365

July 10, 2011

Differentiating Between Market Structures Simulation

The purpose of this paper is to provide a brief discussion surrounding the Differentiating Between Market Structures Simulation from the Week 4 learning materials, which used East-West Transportation to illustrate perfect competition, a monopoly, an oligopoly, and finally a monopolistic competition environment (University of Phoenix, n.d.). In this paper, I will first give a summary of the simulation. First, I will discuss the advantages and limitations of supply and demand identified in the simulation. Next, I will discuss the market structure in which Nike Corporation exists. I will evaluate the effectiveness of this structure for Nike. Finally, I will analyze how organizations in each market structure maximize profits. Upon reading this paper, you should understand the overall purpose of the simulation, and you should understand how I relate the principles of the study to Nike Corporation. You will also be given a short synopsis of how companies profit in each market structure.

Simulation Summary

Before I can get too deep in the analysis of the concepts discussed in the market structures simulation, I must first provide a quick summary of what took place in the simulation. First, the simulation began by illustrating what took place when East-West’s Consumer Goods Division operated in a perfect competition structure. As we have learned from the reading, in a perfect competition there is no chance for economic profit in the long term (University of Phoenix, 2008). This point is further illustrated in the table shown in Appendix A. Due to the fact that it is almost impossible to profit from a perfect competition long-term, we were faced with two possible decisions. I chose to raise prices in order to cover variable costs rather than shut down...