Differentiating Between Market Structures

Differentiating Between Market Structures ECO/365October 19, 2015Differentiating Between Market Structures Competitive balance between market structures distinctive in each industry. The characteristics of a market will give you an idea of as to the type of market you are working with. For this PowerPoint slide I will be focusing on Jacobs Engineering Group. The company operates in a variety of industries mainly focused on the technical service industry. 11/23/2015Page 2Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 25: Market Structure [Video file]. Retrieved October 18, 2015, from https://www.youtube.com/watch?v=9Hxy-TuX9fs2Market StructureThe market structure can be defined by the number of firms; negotiation strengths in terms of ability to set price; the amount of concentration among them; the amount of differentiation and individual products; and the ease or difficulty of entering and exiting the market. 11/23/2015Page 3Market Structure. (2015). Retrieved October 18, 2015, from http://www.businessdictionary.com/definition/market-structure.html.Colander, D.C. (2013). Economics (9th ed.). : McGraw-Hill/Irwin.

3Oligopoly CharacteristicsIn Oligopoly you would find only a small number of sellers that is few enough that any individual can affect the market.

Ability to set own prices

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Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 30: Oligopoly [Video file]. Retrieved October 18, 2015, from https://www.youtube.com/watch?v=ElBF2D7IHAI.4Jacobs Engineering GroupJacobs Engineering Group is one of only a few firms that dominate their industry. This means that it cannot be a Monopoly because there are multiple firms and it cannot be perfect competition because there are few companies competing. Monopolistic Competition is also ruled out because there aren't many firms competing with similar products/services. 11/23/2015Page 5

Industry center - Technical Services. (2015). Retrieved October 18, 2015, from http://biz.yahoo.com/ic/ll/767mkt.html.Colander, D.C. (2013). Economics (9th ed.). : McGraw-Hill/Irwin.

5Strategic Decision MakingStrategic Decision Making - Taking explicit account of a rivals expected response to a decision you are making. (Colander, 2013)11/23/2015Page 6Colander, D.C. (2013). Economics (9th ed.). : McGraw-Hill/Irwin.

6Competitive Strategies In oligopoly, a price competition can turn into a price conflict reducing profits. If one firm decides to increase its price, the other firms may not follow and in turn the other firms will gain the customers. The firm that raised prices will see a drop in quantity demanded, i.e. the demand is more elastic when the firm decides to increase prices.11/23/2015Page 7Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 30: Oligopoly [Video file]. Retrieved October 18, 2015, from https://www.youtube.com/watch?v=ElBF2D7IHAI.

7Competitive Strategies If a firms in an oligopoly market structure decided to drop their prices, the other firms know that they will lose a lot of market shares if they dont drop their prices, so they drop their prices as well. Because most customers are comfortable where they are, the company that dropped the prices in the first place will see very little increase in demand so the demand is inelastic.11/23/2015Page 8Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 30: Oligopoly [Video file]. Retrieved October 18, 2015, from https://www.youtube.com/watch?v=ElBF2D7IHAI.

8RecommendationsJacobs Engineering Group should make the decision to work together with other firms and make their services inelastic. By adding a larger variety of services and making it unique, Jacobs Engineering Group will proceed in making profits.

11/23/2015Page 9Oliver, Antony (2014). Shockwaves across industry as AECOM agrees $6bn deal to buy URS. Retrieved October 18, 2015, from http://www.infrastructure-intelligence.com/article/jul-2014/shockwaves-across-industry-aecom-agrees-6bn-deal-buy-urs.9RecommendationsIn the technical service industry, Jacobs Engineering Group is 2nd the leader when it comes to its ranking. Jacobs Engineering Group was in line to collaborate with a large Engineering, Design and Construction firm URS. The alliance would have given Jacobs Engineering Group the added value of making it unique. AECOM being a larger company bought URS. 11/23/2015Page 10Oliver, Antony (2014). Shockwaves across industry as AECOM agrees $6bn deal to buy URS. Retrieved October 18, 2015, from http://www.infrastructure-intelligence.com/article/jul-2014/shockwaves-across-industry-aecom-agrees-6bn-deal-buy-urs.10ConclusionOligopoly is a common economic system in todays society. The technical service industry is a great example of an oligopoly market structure due to the small number of firms, ability to set prices, barriers that make it difficult to enter the market and having either identical or differentiated products.

11/23/2015Page 11Colander, D.C. (2013). Economics (9th ed.). : McGraw-Hill/Irwin.11