Types of Market Environments and the Internets Affect

Topics: Monopoly, Perfect competition, Oligopoly Pages: 3 (907 words) Published: December 9, 2008
When determining what type of market environment that businesses operate within today, one must decide what segment of the market is being targeted. Whether it is the agricultural industry, the retail sales industry, the automotive industry or the utilities industry, each market has its own type of business environment that it operates under. In recent years, the emergence of the Internet has shifted the balance of power in most industries. In order to explain today’s market environment clearly, it is better to break down each type of market environment. Pure competition is the most consumer-friendly type of business environment. This is due to abundant amounts of information and resources that the consumer has to choose from before deciding on a purchase. However, due to restrictions of what pure competition actually entails, a true environment of pure competition is most of time impossible. By definition, pure competition (or perfect competition) is an idealized market environment in which every market participant is too small to affect the market price by acting on its own (Harvey, 2004). Agriculture is a good example of perfect competition in the U.S. economy. For example, the wheat produced on one farm is essentially the same as that produced on another (Ebert and Griffin, 2003, pg. 13). Another example would be the stock exchange. Anyone person may enter or exit the market at anytime and there are millions of buyers and sellers on any given day. The Internet has changed this market environment by adding new industries. EBay auctions online is a new example of pure competition that the Internet created. At eBay, auctioneers can enter and exit, buy and sell, and there is no one powerful enough to monopolize the industry. Monopolistic competition and pure competition are very similar. Like pure competition, monopolistic competition has many buyers and sellers and these firms can enter and exit the market with relative ease. Monopolistic...

References: Ebert, R. J. & Griffin, R. W. (2003). Understanding the U.S. Business System. In (4th ed.),
Business Essentials (pp. 2-29). Upper Saddle River, NJ: Princeton Hall
oligopoly. (2000). In (4th ed.), The American Heritage Dictionary of the English Language.
Retrieved on December 3, 2008 from http://www.thefreedictionary.com/Oligopoly
pure competition. (2004). Campbell R. Harvey. Retrieved on December 3, 2008 from
http://financial-dictionary.thefreedictionary.com/Pure+competition
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