Dealers’ respective locations are shown on the Fig. 1 and Fig. 2. They are all surrounded by malls and business centers in central areas of Shanghai.
Ital Automotive (Shanghai) Co., Ltd is likely to share the features of oligopolistic market structure, for its relative dominance of the luxury car industry, high barriers to entry, differentiated products and interdependence of the Ferrari and its competitors. Thus, I researched the extent to which it approximates an oligopolistic market structure.
Different types of markets
Market refers to the place where the interactions of buyers and sellers of goods and services happen, and it could be either physical or virtue. Markets are free and there exist many individuals and companies competing against each other in pursuit of maximal profits. Certain features differentiates markets and categorize them into different types: perfect competition; monopoly; monopolistic competition; oligopoly.
Perfect competition market structure defines a market where there are numerous competitors producing and selling identical products with identical costs of production and no barriers to entry or exit. Despite some approximation like the fruit market, perfect competition is thus considered extremely theoretical, for its exorbitant degree of competition.
There are certain features defining perfect competition market structure:
• A large number of buyers and sellers in the industry, and none of them could ever influence the overall market structure.
• Products are homogeneous with identical costs of production and nearly the same selling price; there are no diff...
... middle of paper ...
...gain more market power and price-setting ability. In this way, the demand may shift outward and the demand curve could gradually approximate that of monopoly. For Ital Automotive (Shanghai) Co., Ltd, it shares a little features of monopolistic competition: individual car dealers would effectively advertise and market their differentiated products, in order to persuade consumers of each brand’s uniqueness. “We devote a lot to advertising our cars. All the cars exhibited here are required to participate in the luxury car exhibition in Pudong district once a month.” . However, due to the relatively small number of sellers in the market, the highly differentiated products, high barriers to entry or exit, and the interdependence of each seller, the luxury sports car market in Shanghai does not possess the major characteristics of monopolistic competition market structure.
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