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Evolution of Market Structures

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The 4 types of market structures are Perfect Competition, Monopoly, Oligopoly, and Monoplistic Competition. Given the dynamics of competition, think of the various sequential paths of market structures that firms can move through over time (any of the following is possible):

Monoply-->Oligopoly-->Monopolistic Competition-->Perfect Competition
Monoply-->Oligopoly-->Monopolistic Competition-->back to Oligopoly
Perfect Competition-->Monopolistic Competition-->Oligopoly-->Monopoly

Which path is the most consistent with the traditional Product Life Cycle (introduction, growth, maturity, decline)? How do you see pricing strategies and profits evolve along these possible paths?

I think the answer to this would be monopoly>oligopoly>monopolist competition>back to oligopoly.

Monopoly = skimming or segmentation
Oligopoly= high profits
monopolistic competition = reduced prices, still profits until MR = MC
oligopoly = ???

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Solution Summary

The life cycle framework of industry evolution is discussed.

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Yes, the best answer is Monoply-->Oligopoly-->Monopolistic Competition-->back to Oligopoly
Monopoly = skimming or segmentation
Oligopoly= high profits
monopolistic competition = reduced prices, still profits until MR = MC
oligopoly = ???

The life cycle framework of industry ...

Purchase this Solution
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