Oligopoly: Verizon, AT&T, Sprint, Nextel, and T-Mobile
As demand for cell phones expanded, a clear oligopoly formed among a few cell phone providers. Though the companies provide essentially the same service, they do so with clear differentiations in service plans. Such differentiations are clear in the companies’ aggressive advertising campaigns. Given the significant obstacles to market entrance, primarily economies of scale, there are only a few service providers, including Verizon, AT&T, Sprint, Nextel, and T-Mobile. Recently, the companies have come under suspicion of collusion based on text-messaging prices, though all companies have denied colluding.
Perfect Competition: Orange producers in Florida
Companies supplying oranges meet many of the characteristics of a perfect competition. There are a many producers in the orange market, and they produce a standardized product. Producers rarely advertize, as their standardized products need publicity to differentiate them from the goods of other producers. Standardized products are supplied to the market as perfect substitutes, causing each firm to be a “price taker” and face a perfectly elastic demand curve for their product. Sunkist’s status as a member of a pure competition is solidified by the lack of obstacles to enter the orange market, and further, the lack of control over prices held by Sunkist and other producers.
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