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Price And Nonprice Competition Essay
Interconnected features of the industry, , e.g., the size and relative power of buyers and sellers and level of agreement among them, level and kinds of rivalry, Level of product differentiation and ease of access into and exit from this industry. Four fundamental types of industry system exist (1 ) Perfect Competition-Many buyers and sellers, None being able to determine costs (2 ) Monopoly-Single seller with significant power over supply and costs (3 ) Oligopoly-Several huge merchants who take some power over these costs and (4 ) Monopolistic-Large number of sellers sell differentiated products which are close substitutes for one another.
Nonprice rivalry: Because oligopolistic firms have small to profit through cost competition, they mostly rely on nonprice methods of rivalry. Three of these more general methods of nonprice contest are: (one ) advertisement, (b ) product differentiation, and (c ) barriers to entry. The purpose for most oligopolistic firms is to attract purchasers and increase market share, while keeping this position on cost.
Nonprice rivalry. These are all examples of the business trying to compete on the basis besides cost. Discounts are part of price competition, while price fixing is an illegal exercise that results at higher costs. Price competition is the form of competition between or among businesses that concentrates on the function of cost to attract scarce consumer dollars.
Type: Free Essay Example
Level: Business School
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