Market Structures in the Philippines

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MARKET STRUCTURES IN THE PHILIPPINES
“A term paper submitted as a partial fulfillment of the requirements in Microeconomics”

Submitted by : Jake Kevin P Borja
BSBM – IIB

Submitted to: Ms. Azelle Agdon
Date of submision : October 10, 2012

I. Introduction

Any study of economics has to begin with an understanding of the basic market structure of the country. An economy is made up of producers of goods and services, of traders who make these goods and services available in the market, of consumers who buy the goods and services and so on.

Philippine is an industrialized country wherein there is a lot of establishments and firms inside it. A of lot competitions here like retail trade, including restaurants, clothing stores, convenience stores, gasoline stations and etc. We all have the freedom to enter a new business firm, we just need the extensive knowledge of prices and technology. The real world is widely populated by competitors whereas half of the economy’s total production comes from competitive firms.

A market structure is characterized by a large number of small firms but not identical products sold by all firms. These are the four basic market structure in the Philippines, Pure competition, monopoly, oligopoly and cartel. Competitors have typically small firms, absolute and relative and capital requirements are low. Competitive industries is relatively easy but we have to know the market structure where we will establish our own business because if not nothing prevents an competitor from holding a going out of business sale and shutting down.

II. Pure Competition
The market consist ofbuyers and sellers trading in a uniform commodity such as wheat, copper or financial securities. No single buyer or seller has much effect on the going market price. A seller cannot change more than the going price, because buyer can obtain as much as they need at the going price. In a purely competitive market, marketing research, product development, pricing, advertising and sales promotion play little or no role. Thus, sellers in these markets do not spend much time on marketing strategy. A market said to be purely competitive if :

1. There is a large number of buyers and sellers of the commodity each too small affect the prices of the commodity. 2. The output of all firms in the market are homogenous. Example ; The product of any seller is considered as exactly alike in all respects to the product of any other seller and : 3. There is perfect mobility of resources. Example ; There is freedom of entry into and exit in the industry. Perfect competition : To the far left of the market structure continuum is perfect competition, characterized by a large number of relatively small competitors, each with no market control. Perfect competition is an idealized market structure that provides a benchmark efficiency.

Example of Pure Competition :
Wheat Farm – There are great number of similar farms ; the product is standardized ; there is no control over price ; there is no nonprice competition. However, entry is difficult because of the cost of acquiring land and from present proprietor. Ofcourse, government programs to assist agriculture complicate the purity of this example.

III. Monopoly
A market with a sole supplier of good and services or resources for which there is no close subtitute. In addition, there is barriers to entry of new firms.
In economics, an industry with a single firm that produce a product, for which there are no close substitutes and in which significant barriers to entry prevent other firms from entering the industry to compete for profit is called Pure Monopoly. One firm ; unique product ; with no close substitutes ; much control over price ; price maker ; entry is blocked ; mostly public relation advertising. * There is Market Power

* Single Seller
* One product ( Limited or no group...
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