Determine the market structure (competition, monopolistic competition, oligopoly, and monopoly) that best characterizes the infant formula industry. Analysis should reference the following industry characteristics: number of firms in industry, degree of product similarity, ease of entry and exit, use of non price competition, use of strategic decision making, and shape of demand curve relative to industry demand.
A very good analysis of the infant formula industry is contained in chapter 24 of Intermediate Microeconomics: A Modern Approach by Hal R. Varian. It is available online here:
It cites several sources, including GAO reports. These reports indicate that skyrocketing cost of baby formula are due to WIC, a government program which provides formula to low-income households. Varian finds the underlying cause of the price ...