Market Structure

Topics: Monopoly, Economics, Coca-Cola Pages: 3 (722 words) Published: November 29, 2008
Market Structure

In today’s markets, most large corporations are not viewed as a U.S., German, or Japanese corporation. In this day and age they are seen as global corporations, which are corporations that have substantial operations on the production and sales sides of the business, in more than one country. This is area The Coca-Cola Company operates.

The company does so within a Monopolistic competition market. This is a market structure in which there are many firms selling differentiated products; there are few barriers to entry (Colander, 2004). Colander identifies the four characteristics of monopolistic competition as, “many sellers, differentiated products, multiple dimensions of competition, easy entry of new organizations in the long-run” (Colander, 2004). First is the fact there are many sellers, such as, Coke, Pepsi, 7UP, and many other smaller companies. In monopolistic competition firms will not worry about their rivals’ reactions. An example from Colander is the many types of soap: Ivory, Irish Spring, Yardley’s Old English, and so on, so when Ivory decides to run a sale, it won’t spend a lot of time thinking about Old English’s reaction. This holds true for Coke as well. They will run a sale on certain packages and flavors of soft drinks, without worrying how Pepsi or 7UP will react to what they have done.

According to Colander, “the “many sellers” characteristic gives monopolistic competition its competitive aspect. Product differentiation gives it its monopolistic aspect.” The goods that are sold in this market aren’t homogeneous, as they would be in a perfect competition market. The products in this market differ slightly from each other. Coca-Cola taste slightly different from Pepsi, which in turn taste slightly different from RC. Sprite taste slightly different from 7UP, which in turn taste slightly different from Sierra Mist. This can be seen throughout all the brands from different companies.

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