Monopolistic Competitive Market Structure And Elasticity Essay

Monopolistic Competitive Market Structure And Elasticity Essay

Length: 1008 words (2.9 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Over the past few years the price of pharmaceuticals has been increasing at an alarming rate. Drugs such as Daraprim, which treats parasitic infections, have had startling price increases. One even increased as much as fifty times the original price in one night (Sachs, 2). These price increases have led to an increased call for healthcare reform. The microeconomics class I took last semester has helped me to understand some of the proposed reforms such as those suggested in California and Ohio. These states are considering enacting a price ceiling on all pharmaceuticals sold within the state 's boundaries which could lead to a shortage of various prescription drugs. The purpose of this paper is to explain the monopolistic competitive market structure and elasticity because they helped me understand “How to Bring Down Drug Prices Post-Election: Reforms have been proposed at the federal and state level”, by Rachel Sachs.
Ideally the pharmaceutical industry would have a monopolistic competitive market structure. There would be the brand name drug with several generic versions available, all performing the same function biologically while all being slightly different. Entering or exiting the industry would be simple and inexpensive. This would lead to a large number of independent firms, each holding a small market share. Although all of the products would be basically the same there would be slight differences like the types of fillers used and each firm would be pushing its product for its differences through advertising or sales promotions. These slight or suggested differences give the firms some leeway when setting prices. But unlike the products of a monopolistic industry the firm does not have complete control over the price t...


... middle of paper ...


...a necessity, the slope of the line will be positive.
The microeconomics class I took last semester helped me to realize that political actions have a profound impact on the economy and the repercussions should be thought about before enacting any policy on any industry. Whether on the pharmaceutical industry or the automotive industry the changes must be thought of form an economic perspective viewing and weighing the costs and benefits for each choice made. A minor change in price could lead to a major change in the quantity desired by the populace. Considering the amount of competition, how easy it is to change to or from, necessity, and overall cost should be put first in almost all decision making. This microeconomics class has helped me to further develop my critical thinking, logic, and decision making skills which I hope to use again many times in the future.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Competition And Monopolistic Competition Essay

- Chapter 13: Monopolistic competition is a market structure in which barriers to entry are low and many firms compete by selling similar, but not identical products. The key features here is that products that monopolistically competitive firms sell are differentiated from one another in some way. A good example would be Starbucks sells coffee and competes in the coffee market against other firms selling coffee. But Starbucks coffee is not identical to the other coffee that other firms sell. A competitive market is one where there are numerous producers that compete with one another in hopes to provide goods and services, we, as consumers, want and need....   [tags: Monopoly, Economics, Perfect competition]

Better Essays
877 words (2.5 pages)

Essay about Monopolistic Competition

- Are you an extensive traveller. Do you love music. Then your answer is a MP3 Player, a device that allows you to listen to your favorite music on the go. There is nothing like putting on the head set, laying back and listening to some refreshing music when you are exhausted. This is when a MP3 player comes in handy. MP3 players have dominated the market in a huge way and companies would be ready to pay a handsome amount for some off the basket innovation that would lead their company all the way the top....   [tags: MP3 Player, Persuasive Essay ]

Better Essays
981 words (2.8 pages)

The Corporate Demand For Insurance Essay

- I. Introduction The corporate demand for insurance may be motivated by a company’s strategic decisions on output and price market.Most real world market are characterised by small numbers of relatively large firms which compete with each other strategically .The purpose of this paper is to discuss the strategic behaviour of firms operating in oligopolistic industry and their response to risk .By putting our focuses on oligopoly markets , it should be relevant to discuss the key strategic elements of such industry and to see why this industry operates in such type of environment....   [tags: Oligopolistic, monopolistic market]

Better Essays
3419 words (9.8 pages)

Different Types Of Market Structures Essay

- Companies across the world conduct business within certain market structures. These market structures have been established based on factors such as, the number of sellers within the market, the barriers that exist within the market that create difficulty for new companies to come into the market, the types of products that are being sold, the nature of the competing companies, and the pricing power that the companies within the market have. This paper will examine the different types of market structures organizations operate in and evaluate the differences between market structures....   [tags: Perfect competition, Economics, Monopoly]

Better Essays
1218 words (3.5 pages)

Market Structure Of Monopolistic Competition Essay

- 1) There are three market types know as Perfect Competition, Monopolistic Competition, and a Monopoly. In the market structure of Perfect Competition there is a large number of producers that produce standardize objects, but they have no power, low barriers to entry, and have a lot of competition. Moreover, the market structure of Monopolistic Competition also has a large number of producers and low barriers to entry, like “Perfect Competition”; nonetheless the product is differentiated, so therefore they have some power, and competition....   [tags: Supply and demand, Price elasticity of demand]

Better Essays
886 words (2.5 pages)

The Market for Alcoholiic Beverages Essay

- ECON 1101 - The Market for Alcoholic Beverages An important purpose of this study has been to search for differences in economic factors, prices and incomes to explain the differences in the consumption of alcoholic beverages. The effects of the prices and incomes on consumption are measured by elasticity’s, which include price elasticity. Price elasticity of demand is a measure used in economics to show the elasticity of the quantity demanded of a good compared to a change in its price, ceteris paribus....   [tags: Economic Factors, Prices, Incomes, Alcohol]

Better Essays
1239 words (3.5 pages)

The Market Structures Of Oligopoly Essay

- Introduction Unlike other market structures, Oligopoly is a market structure existing of few firms who have the large majority of market share. Because each firm has a sizable part of the market, key characteristics of oligopolistic firms is the existence of mutual interdependent and repeated interaction of the firms as stated by economist Eric Nilsson (2007). Mutual interdependence exists when two or more firms depend on one another. The actions of one firm will strategically affect the actions of another....   [tags: Economics, Monopoly, Marketing]

Better Essays
946 words (2.7 pages)

Essay on Marketing Analysis : The 4 Market Structures

- The 4 market structures in relation to the benefits and costs to the consumer and producer A market structure are the characteristics of a market that significantly affect the behavior and interaction of buyers and sellers (Cabiya-an, 2014). This essay will describe the 4 market structures; perfect competition, monopolistic competition, oligopoly and monopoly. I will compare and contrast the market structures in relation to benefits and costs to the consumer and producer. According to Sloman (2013), perfect competition is the most extreme market structure....   [tags: Economics, Supply and demand, Monopoly]

Better Essays
1100 words (3.1 pages)

Major Market Structures Essays

- During the initial phase of starting up a business, there are many factors to weigh in. If you desire a particular kind of lifestyle, then one of the major factors to consider is what kind of market you would like to be in. There are four major market structures, perfect competition, monopolistic competition, oligopoly, and monopoly. All of these markets have positive and negative attributes, including but not limited to, barriers to entry, how many sellers are in a particular market, and the stress of running a business while keeping a keen eye on product pricing....   [tags: Economics]

Better Essays
2256 words (6.4 pages)

Monopolistic Competition Essay

- According to the CollinsDictionary.com, “monopolistic means exclusive control of the market supply of a product or service”. (Collins, 2013) A monopolistic has total control of profitable action through the ownership or legitimate funding. Monopolistic competition is about non-price competition (marketing, trademarks, designer titles) whereas the company’s product is different from its competitor’s product or substitute but functions in a similar fashion in whatever industry it may be facilitated for its consumers and lead toward rise in monopoly power but not proceeds....   [tags: market, pricing strategy, insurance]

Better Essays
883 words (2.5 pages)