The paper 'The Difference between Duopolistic and Monopolistic - Jordan’ s Banking Industry" is an outstanding example of a finance and accounting case study. The monopolistic competition market structure is the market structure that is characterised by firms have many competitors, but each firm sells a slightly different product. The firms in the industry produce similar products, but the products are not perfect substitutes. The characteristics of the monopolistic market structure include the following; The various firms in the monopolistic market structure make their own independent decisions about the prices and output of their products based on their cost of production and market (Anzoategui, 2010).
Each firm in the industry has access to knowledge about the industry. There are no barriers to entry. Firms can enter and leave the industry at will. The central feature that characterises this market structure is that the products are differentiated. Because of the considerable market power that each firm possess, each firm can set their own prices they are price makers and not price takers. Firms in this industry have to engage in high competition; hence there are high advertising costs.
All the firms in the industry seek to maximise profits. The duopolistic competition market structure is a market that is characterised by only two competitors in the industry (Markusen, 2011). In realistic terms, this is an oligopolistic competition market structure that is used to define the market structure that only two firms are dominant in the industry. Under this competition structure, the competitors that exist in the industry have considerable influence in the market, which all the competitors in the market have to respond to the decisions taken by the other firms in the industry.
The firms in this industry have a large degree of control in the market. This market structure is characterised by the following; there exist barriers of entry into the industry. In a duopolistic market structure, concentration is an issue in the market because the market is controlled by a small number of firms. In duopolistic markets structures, the firms may either produce highly differentiated or homogeneous products. The difference between monopolistic and duopolistic competition market structure is numerous. In a duopolistic market structure, the market is characterised by two competitors in the market while in monopolistic competition market structure is characterised by numerous firms that compete for the same market.
In monopolistic market structure, the products produced are similar, but differentiated from each other while, in duopolistic competition market structure, the products produced can either be homogeneous or differentiated products (David Soberman, 2012). There exist barriers of entry in the duopolistic while there are no barriers to entry in the monopolistic competition market structure. There exists mutual interdependence in the pricing decision of the firms in duopolistic industries while, in monopolistic industries, there is interdependence in the pricing decisions of the firms; each firm can set its own prices. Monopolistic competition in Jordan This paper will examine the monopolistic competition structure in Jordan’ s banking industry.
Jordan is an upper-middle-income country with a population of 6.2 million people. Over 80% of the population lives in urban areas. The services industry in Jordan accounts for more than 70% of the GDP and employs about 75% of Jordan’ s working population (Akroush, 2008).
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