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Monopolies and Oligopolies Explored

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1. How many major wireless phone handset manufacturers are there? What is the market structure? What pricing strategies do wireless phone handset manufacturers use? How do wireless phone makers attempt to differentiate their handset offerings?

2. In two of the four market structures (monopoly, Oligopoly, Monopolistic Competition, or Perfect Competition), using price to compete is not an option; what can you do to improve revenues in one of these structures? Select a company and describe the effects on the organization of using this strategy.

3. Identify an organization and recommend methods to reduce costs. What effects do technologies have on costs? What are some lower-cost sources the organization can utilize to reduce costs? What considerations might cause a profit-maximizing firm to decide to forgo using lower-cost sources?

4. Among the four principal market structure models, monopoly and oligopoly offer the best opportunities for a firm to earn economic profits in the long run. What are some strategies for the firm which is earning economic profits to legally sustain them over time? Discuss this question in terms of monopolies and oligopolies.

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Solution Summary

This solution thoroughly explains monopolies and oligopolies with examples by answering the 4 question in 502 words.

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1. How many major wireless phone handset manufacturers are there? What is the market structure? What pricing strategies do wireless phone handset manufacturers use? How do wireless phone makers attempt to differentiate their handset offerings?

There are ten major wireless phone handset manufacturers. These top manufacturers are Nokia, Samsung, Motorola, Sony Ericsson, RIM, HTC, Apple iPhone, HTC, LG, HP. These six major wireless phone handset manufacturers account for almost 80% of the market. As far as market structure is concerned the market is of monopolistic competition as many sellers selling similar but non-identical products and all are price makers with free entry and exit.

These firms use following pricing strategy:
(i) Penetration pricing: Pricing with intention to maximize their market ...

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