There is much competition in the markets of guitar sales in many different market structures in the U.S., including perfectly competitive, monopolistic, monopolistic competitive, and oligopolistic. The most popular market for selling brand name guitars is a perfectly competitive market. Some characteristics of a perfectly competitive market are having many buyers and many sellers, all firms sell identical goods, buyers and sellers have relavant information about prices, product quality, sources of supply, etc. and firms have easy entry into and exit out of the market. Because of the four characteristics of a perfectly competitive market, sellers in this market end up being price takers.
There is also a monopolistic market (such as Fender). Some characteristics of a monopolistic market is that the market consists of one seller, that single seller sells a product that has no close substitutes and the barriers to entry are high, which means that entry into the market id extremely difficult. A monopoly firm (or monopolist) is a price searcher. Price searchers can sell some of their product at various prices, like Gibson, for example. A public franchise is a right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing so. So, any potential competition is thus eliminated by law. Sometimes, companies will have such a low average cost that they make a natural monopoly for themselves, like how Gibson was before Fender came into the scene. Although, there are no monopolies anymore, because it is illegal, due to antitrust laws. These laws are meant to control monopoly power and to preserve and promote competition. There never exactly has been a monopoly in guitar sales, anyway, though.
Specifically, monopolistic competitive markets don't exist anymore, in essence, but I'll explain them, anyway. The market includes many buyers and many sellers, the firms produce and sell slightly differentiated products and the firms have easy entry into and exit out of the market. There is no guitar market that was like this that comes to mind.
There is also a monopolistic market (such as Fender). Some characteristics of a monopolistic market is that the market consists of one seller, that single seller sells a product that has no close substitutes and the barriers to entry are high, which means that entry into the market id extremely difficult. A monopoly firm (or monopolist) is a price searcher. Price searchers can sell some of their product at various prices, like Gibson, for example. A public franchise is a right granted to a firm by government that permits the firm to provide a particular good or service and excludes all others from doing so. So, any potential competition is thus eliminated by law. Sometimes, companies will have such a low average cost that they make a natural monopoly for themselves, like how Gibson was before Fender came into the scene. Although, there are no monopolies anymore, because it is illegal, due to antitrust laws. These laws are meant to control monopoly power and to preserve and promote competition. There never exactly has been a monopoly in guitar sales, anyway, though.
Specifically, monopolistic competitive markets don't exist anymore, in essence, but I'll explain them, anyway. The market includes many buyers and many sellers, the firms produce and sell slightly differentiated products and the firms have easy entry into and exit out of the market. There is no guitar market that was like this that comes to mind.
posted by Flying V at 7:13 AM
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