Imperfect Competition (Essay Sample)

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Imperfect Competition 2
Introduction
Imperfect competition is the type of competition in which some but not all features of perfect competition are revealed. Imperfect competition occurs as a result of a number of factors. For example, there are cases where there is a product traded in by very few organizations and new entry into the market is restricted. In this case the competition is termed oligopolistic in nature. In this case, we take a look at the case of Budget Blinds, Inc.
Budget Blinds Market and Competition
From the time of its formation in 1992 by five entrepreneurs, Budget Blinds has not only succeeded but thrived as well (Orange 1). The five ambitious entrepreneurs gave home owners the capacity to shop for window coverings at home where such windows were. There have been very few business organizations created since 1992 to offer services in the same way and approach as Budget Blinds. The type of competition in this case can be said to be oligopolistic in nature.
Oligopolistic competition is the form of competition in which there are very few participants carrying out the same business due to certain barriers to entry. The form of competition that Budget Blinds faces in its operations enables it to properly plan for future business operations since there are limited threats of new entrants into the industry.
One of the closest competitors to Budget Blinds is Val U Blind that specializes in the design and installation of window blinds (Circut 1). The company is owned and managed by Valarie White. There have been disagreements between Budget Blinds and Val U Blinds as a result of the market share territories since they offer nearly similar products to the same populations, sometimes making operations unprofitable.
The competition being oligopolistic does not lead to heavy impacts on the businesses. Budget Blinds has been constantly expanding its operations and supplies in the United States, Canada and other major world economies. In spite of the few debt challenges that have faced the company in the recent past, the business transactions in the company have continued to grow with more expectations from the managers of the operations. Oligopolistic competition is appropriate for businesses that strive to maintain a stable market share and even expand such shares over time.
How Budget Blinds can Increase Market Power
Customers are often delighted at the slightest modification on the products and services that they acquire. Budget Blinds can invest in innovation, research and development to come up with unique services that other competitors do not offer yet. This will increase the sales volumes and as a result generate more revenue for the company.
It is also advisable for the company to revise the pricing strategy. Since there are possibilities of more organizations being set up with similar services, competitive pricing is necessary. Customers often prefer to satisfy their needs at the lowest possible costs. The prices, however, should not be those that make the company run at losses.
Patent Licence
Ownership of any work of innovations should in most cases rest in the hands of the developer. However, competition is necessary for fair terms to be provided to the customers who consume these inventions directly or indirectly. This implies that it is necessary for patents to expire.
In the event that patents would stay to perpetuity, the sole producers would fix their own prices as a result of market monopoly. This is unhealthy for any product market. With time, technology advances and people would come up with better ideas than those already invented by owners of patents. This calls for automatic expiry of the original patents. The other reason as to why patents need to expire is as a result of failure of the patent owner to abide by the obligations that he or she is required of.
In the event that patents were set not to expire, business would not ...