Strategic Behavior Oligopolies and Local Market Power (Essay Sample)

Strategic Behavior
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Discussion 1: Strategic Behavior Oligopolies.
Microsoft and Apple have different types of product market/ market structure. Microsoft itself has a monopoly market structure. It is the only seller and manufacturer of windows operating system. It has no substitute company that may enter the industry. More so, in a monopoly market structure, new firms cannot enter the industry, and the monopoly firm faces no competition. It implies that Microsoft dominates the industry, and it’s the price maker. It has monopoly power resulted in the massive size of the market. Nevertheless, Apple operates in a monopolistic competition market. In this product market, there is stiff competition. Apple deals with manufacture and sale of laptops, phones, and computers. Some of its major competitors include computer firms such as HP, Dell, and Samsung. Despite forces from the competitors, Apple is the leading firm in the digital music and computer industry. Much of its profits is generated from iTunes. CITATION Gle95 \l 1033 (Gleick, 1995)
Competition in monopolistic competition market plays a significant role in the performance of any company within the industry. For this reason, Microsoft funded Apple with an aim of strengthening Apple’s competition in the computer industry. The partnership involved bundling MS Office and IE products with the MAC OS. As a result, Microsoft earned more revenue from sales made by Apple. More so, it strengthened its monopoly power by winning more customers. Microsoft also needed to preserve competitiveness in the industry ensure that no entry of new firms in the long run. Apple, on the other hand, was able to maintain its competition power since their products were improved meeting the consumers’ total quantity management. CITATION Spo06 \l 1033 (Spout, 2006)
Microsoft was afraid if Apple did not survive since its power as a monopoly firm would be reduced. Lack of competition in the market would lead to the entrance of many businesses in the industry and as a result, the revenue made by Microsoft would reduce significantly. More so, other operating systems manufacturer companies would enter in the market, and Microsoft would not dominate the market again.
References BIBLIOGRAPHY Gleick, J. (1995). Making " Microsoft Safe for Capitalism". The New York Times.Spout, J. (2006). Has Apple Finally become a Monopoly-Like Microsoft? .
Discussion 2: Local Market Power
Bulls Eye Department Store operates in an oligopoly market structure. This type of product market is characterized a few firms in the market, the interdependence of the company, differentiated products, and barriers to entry (although less than those of monopoly). Bulls Eye Department Store is the only seller in Show Low, and this shows it dominates the market in this region and its surrounding. It dominates the area thus it becomes the price maker/setter. It operates as if it is in a mo...