Differentiating Between Market Structures

Differentiating Between Market Structures To understand what the difference is between the types of market structures first a person must comprehend exactly how supply and demand affects private goods, monopolies, common resources, and the public. These structures affect directly how the labor market equilibrium is established. Many businesses have this type of market structure, which affects indirectly and directly labor supply and demand. Wal-mart is a great example of a business that has the characteristics of multiple market structures. Goods that are available for consumption share two big characteristics, which places them in two types of categories, which are rivalries and excludable goods. There are four classifications for dividing goods, which are natural monopolies, common goods, public goods, and private goods. Private goods are considered excludable because they have low cost, which prevents a consumer who has not purchased the good from being able to consume it. In rival consumption, the good is consumed for pleasure only by one consumer. Private goods example would be a designer clothing store. Consumers may purchase the designer clothing and be the sole owner of the product. Public goods are not an excludable and do not have rival consumption. The government supplies public goods instead of private firms. A public good example is national defense because no matter if, the consumer purchases the good or does not the consumer still cannot be excluded if he or she wishes to consume the goods. In addition, they do not rival in their consumption because if one consumer uses them it does not cause interference for another consumer to use national defense. A common resource is not considered an excludable good however, they do rival in consumption. Anytime social management systems are poor, there is concern for overuse of common resources. A common resource example is fishing in an area that limits how many fish a person can catch.

References: Colander, D.C. (2010). Economics (8th ed.). Retrieved from The University of Phoenix eBook Collection database.. Hannaford, S. (2005). Both sides now. Harvard Business Review, 83(3), 17-17. Retrieved from http://search.ebscohost.com.ezproxy.apollolibrary.com/login.aspx?direct=true&db=bth&AN=16224214&site=bsi-live Wal-Mart Stores, Inc. (2010). Services you need, prices you can afford. Retrieved from http://www.walmart.com/cp/Wal-Mart-Tire-Lube-Express/495843