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Running head: Market Structures
Market Structures
MBA501
University of Phoenix Online
Market Structures
McConnell and Brue (2004) describe four market structures that companies align themselves with during the course of their corporate lives. This paper will give examples of the four market structures: Pure Competition, Pure Monopoly, Monopolistic Competition and Oligopoly. Companies may move from market structure to market structure over the course of growth and time. This movement between structures may be the result of product changes, introduction of competition or consumer interests. This paper will describe one such company that has made the migration from structure to structure.
According to McConnell and Brue (2004), pure competition is "a very large number of firms producing a standardized product". This is the case with the corn industry. One example of a pure competition corporation is "Farmers Cooperative Association" (FCA). A Farmers' Cooperative Association is a group of farmers, at their convenience, who come together to form a co-op in order to: improve bargaining power; reduce costs; obtain market access or broaden market opportunities and improve product or service quality (Nebraska Department of Agriculture, n.d.) that would normally not be achieved as an individual farmer. In doing so each farmer pays a fee to the Cooperation. The Cooperation itself is normally a non-profit organization in that the profit is realized back to the members supplying the product. Pricing is determined by the Board of Trade and is typically not negotiable. Cooperatives can hold corn at the request of its members in order to obtain a be ...