Best Market Structure for a Pipeline to Function In

For Deliverable 5, you were asked to submit a 2 page report detailing the current market structure and the anticipated market structure after the pipeline is built. You were also asked to include tables to show the characteristics of each of the above market structures and where our firm conforms or does not conform to the characteristics of the different market structures. Finally, you were asked to explain the impact on price and quantity and any pertinent changes to the firm’s pricing strategy after the change in market structure. Below you will find detailed comments regarding how your work was graded. Please let me know if you have any additional questions regarding how your work was graded.

Marlo

Best Market Structure for a Pipeline to Function in

Angela Petersen

Rasmussen College

Author Note

This paper is being submitted on February 7, 2019, for Audra Sherwood’s, Managerial Economics course.

Best Market Structure for A Pipeline to Function In

Market structure.

In the current world the type of market that exists in the oil company is an Oligopoly Market Structure. Why an Oligopoly? because there are few supplies who deal with an identical commodity and many buyers. Oligopoly is derived from a Greek word Oligo means few hence oligopoly is therefore a market structure where there are few firms. As we all know there are several firms which deal with the supply of oil, our company is one of them. When our company completes the pipeline project the market structure will be forced to change to a monopoly since we will take over the large market and we will be able to gain control of the market in the following ways: First, because we will have control over a large market. Secondly, we will have cut down on some costs which other firms in the industry will still be incurring hence they might be forced out of the market, costs such as transport costs will be reduced in our firm and this will cause a difference between us with other firms. To them it will be additional costs which will make their expenses expensive. Finally, we will gain control over oil supply. In short, the construction of a pipeline will be an added advantage to our company since it will cut down on costs incurred during transportation and moreover it will increase our market coverage. Comment by Chavarria: CORRECT: You provided an accurate explanation of the current market structure, using clear examples and well-defined reasons for proposal recommendation. Comment by Chavarria: NEEDS REVISION: You were asked to provide an accurate explanation of the anticipated market, using clear examples and well-defined reasons for proposal recommendation. The future market structure assumption is inaccurate since the single pipeline would assume 1 firm in complete control of the pipeline production market.

Oligopoly Market Structure

Monopoly Market Structure

Characteristics of the monopoly and oligopoly Market Structures

According to [Baumol, 1961; Yadav, 1995] the characteristics of the monopoly type of market our company already faces a big challenge where it is difficult for other firms to enter into the market because for example the added costs the company will incur or because the existing company may be enjoying a large economy of scale. To enter the market as you can clearly see requires an art of planning. To my opinion building a railway line as already proposed is a good ideabecause our company will be able to command a bigger size of the market.(Horowitz, 1981; Belk, 1975.] The result would be that we will pose competition to the OPEC company that is dominant currently by first offering affordable prices hence more customers will prefer to associate themselves with us since we will have offered them a better alternative.

An oligopoly describes a market structure which is dominated by only a small number of firms. This results in a state of limited competition. Our company will have to take advantage to gain economic power in the market since there will be only one big threat .It will also mean we will have an equal chance to make profits and with time we may even overtake the current monopoly. If we keenly analyze this matter we will discover that the pipeline will cater for transportation hence the consumers will not have to hire trucks to collect the oil hence this will be an added advantage to the consumers who are located far away from the refinery company and this will be a big blow to the existing company.

References

Blandina, A. (2018). Can you hear me now? The moderating effects of procedural justice within consumer-brand relationships.

Challenges to Urban Transport Sustainability and Smart ... (n.d.). Retrieved from https://benthamopen.com/contents/pdf/TOTJ/TOTJ-2-29.pdf

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01234

Did not SubmitNo PassCompetence ProficiencyMastery

Not Submitted

Introduction and/or conclusion did

not summarize the current and

future market structures.

Introduction and conclusion

summarized the current and future

market structures.

Introduction and conclusion

summarized the current and future

market structures, using clear

supporting evidence.

Introduction and conclusion

summarized the current and future

market structures, using clear

supporting evidence and a well-

defined synopsis of the report goals.

Not Submitted

Explanation of current market

included, but unclear or incorrect.

Explanation of current market is

correct.

Explanation of current market is

correct, using clear examples.

Explanation of current market is

correct, using clear examples and

well-defined reasons for proposal

recommendation.

Not Submitted

Explanation of anticipated market

included, but unclear or incorrect.

Explanation of anticipated market is

correct.

Explanation of anticipated market is

correct, using clear examples.

Explanation of anticipated market is

correct, using clear examples and

well-defined reasons for proposal

recommendation.

Not Submitted

Table of characteristics included,

but unclear or incorrect.

Table of characteristics is correct.

Table of characteristics is correct,

and written explanation used clear

examples.

Table of characteristics is correct,

using clear examples and well-

defined reasons for proposal

recommendation.

Not Submitted

Explanation of changes to price,

quantity, and pricing strategy

included, but unclear or incorrect.

Explanation of changes to price,

quantity, and pricing strategy

correct.

Explanation of changes to price,

quantity, and pricing strategy

correct, using clear examples.

Explanation of changes to price,

quantity, and pricing strategy

correct, using clear examples and

well-defined reasons for proposal

recommendation.

FFCBA