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Industry structure of Amazon and Wal-Mart

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Please help answer two questions that relate to the attached article. Each question should be at least 2 to 3 paragraphs.

1.What type of industry structure do Wal-Mart and Amazon inhabit? Is there behavior (cutting prices to below cost) conform to the theoretical expectations for that industry structure?

2.What will be the long run outcome for the industry: how many firms, prices to consumers, new entrants, exists?

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Solution Summary

Industry structure of Amazon and Wal-Mart and long-run outcome are provided in the solution.

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Wal-Mart and Amazon.com are exhibiting behavior typical of ologopolists. Each is carefully watching the other's marketing strategies and then reacting in order to maintain its market share. Cutting prices below cost is typical behavior for oligopolists, since each is large and can easily absorb a small loss in some areas. The retailers know that increasing market share will in ...

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