The Importance of Pricing Strategies in Market Structures

Running Head: THE IMPORTANCE OF PRICING STRAGETIES IN MARKET STRUCTURES THE IMPORTANCE OF PRICING STRAGETIES IN MARKET STRUCTURES Yvette Daniels American Public University Systems October 15, 2011 The importance of pricing strategies is different depending upon the type of market structure because each market structure has special components that affect the pricing schema and determination of output. Although the pricing strategies are different, it is highly important for a select market structure to choose the optimal pricing policy to insure that the firm is able to be successful and earn long-term profit. It also important to remember that pricing policies are subject to change considering that the business environment is ever†¦show more content†¦These market sturctures consist of a few firms or sellers and the entry barriers are moderate to high for protection from possible entrants (Samuelson amp; Marks, 2010). Oligopolies may have either homogeneous or differentiated products (Samuelson amp; Marks, 2010). Firms are interconnected with one another within an oligopoly and setting prices will effect the other firms within the industry. The demand curve of a oliopogy is kinked and elastic to price increases (Samuelson amp; Marks, 2010). A monopoly is the most common type of market structure in which firms aim to achieve ultimately within a industry. Monopoly the opposite of the perfect competition because a monoploy has a single firm that produces a superior product. Additionally, the a single firm ususally owns over 90 percent of the market (Samuelson amp; Marks, 2010). The products are not able to be substituted which allows a monopoly to set it prices or a price maker, however the price must not be unbearable to the consumers. The demand curve that monopoloies have is downward sloping because of the fact that monopoloies are able to control the price and quality (Samuelson amp; Marks, 2010). A monopoly has strict barrieres to entry and some barriers are placed by the government that allow a monopoly to remain a leader within its market structure and industry. Monopoloies are considered such due to the offering of one parti cular product/service mainly.Show MoreRelatedImplementing Pricing Strategy1015 Words   |  5 PagesRunning head: IMPLEMENTING PRICING STRATEGY Implementing Pricing Strategies Janaina Logan Strayer University Strategic Market Pricing – MKT 402 Professor Charla Session-Reed March 18, 2011 Abstract Implementing pricing strategy decisions requires properly addressing organizational issues related to how decisions are made and enforced as well as motivational issues that encourage managers to engage in more profitable behaviors. 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