TYPES OF

COMPETITION
Introduction to Business
2/2009

MARKET
STRUCTURE
PERFECT
MONOPOLISTIC
OLIGOPOLY
MONOPOLY

PERFECT

PERFECT

MONOPOLISTI
C

MONOPOLISTIC

OLIGOPOLY

OLIGOPOLY

MONOPOLY

MONOPOLY

A monopoly is a
company that
dominates and controls
a specific industry.

QUESTIONS & ANSWERS

From

Wal-Mart s case study


1. What industry WalMart is competing in?

GENERAL
MERCHANDISE
RETAILING
INDUSTRY

2. Which market structure should

Wal-Mart be considered?

Monopolisti
c

According to
theory

There are a lot of retailers (competitors) like Wal-Mart in

the market.
It is easy to be general merchandise retailers.
Wal-Mart can control over the price by dumping it down while
others(small retailers) cannot.

differentiated

The products are

by product testing
tactics to let the customers perceived that they are The new,
improved Great Value products and redesigning Great
Value packaging graphics although it may be still similar or
same.

In a world where
most retailers are
categorized as having a
monopolistic
competition market
structure, Wal-Mart
Stores Inc. appears to
have an oligopoly
market structure.
Nevertheless, because
there are far too many
retailers to deal with,
then they also have a
monopolistic
competition market
structure. Regardless,
Wal-Mart would rather
have it this way because
it has not hurt them at
all by having
competition.

Wal-Mart
might
be
considered
as
Oligopoly
Wal- Mart is the 1st in
retailing market.

3. Which determinant of demand/supply is affected causing change in

demand/supply of products in the general merchandise industry? How?
Explain and draw the diagram to illustrate the effect.

PRICE
DETERMINAN
T

4. As the result of Wal-Marts action, which determinant of

demand/supply is affected causing change in demand/supply of
superior products? How? Explain and draw the diagram to
illustrate the effect.

EXAMPLE OF EFFECTS from Wal-Mart to Superior Products

Wal-Mart has
squeezed
suppliers till they
scream, and forced
them to move jobs
abroad to keep
cutting costs