Market Structure: Simulation, Table and Term Paper

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With respect to its operations, Verizon Wireless is unparalleled. Indeed, it "is one of the strongest competitors due to the foundation of its large nationwide service area and strong customer base. With two quarters of 1.9 million net additions, it has set the bar for competitors to reach." (BW, 1)

This is based on a convergence of extremely visible advertising tactics via television, radio, billboard and sponsorship with a service quality that is unmatched. Boasting and demonstrating a wireless network which shows limited gaps in service reliability if any, Verizon is shown to be particularly competent in the area of wireless service quality. This is its most distinctive competency, with the fewest dropped calls recorded by its customer base and the most expansive calling area in the business.

Analyze how organizations in each market structure maximize profits.

As part of an oligopoly, Verizon possesses this distinction and is simultaneously part of a price-controlling group of firms. This allows the company to maximize profits at its own volition, particularly as it has succeeded in distinguishing itself yet further by its service quality in an already exclusive market context. This is to denote that the oligopolistic firm will ultimately be in a position the determine price ranges for its services to the extent that its relative market advantage will sustain it over the few competitors in the market.

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This is only slightly different from a firm engaged in a Monopolistic Competition such as with Wal-Mart. Here, Wal-Mart is in a position to drive the prices of retail items. Its enormity allows it to produce and distribute goods at a much lower cost than other competitors. As a result, it maximizes profits by undercutting smaller competitors on consumer prices. Often, it is able to sustain this practice to the point of driving competitors out of a market and establishing temporary monopolies.

A monopoly with no competitors need not even use the market threshold established by others to undercut baseline costs. Prior to its disassembly at the hands of the federal government, Microsoft maximized profits simply by cornering a market and creating its own pricing structure. This allowed it to charge a heavy price to consumers without fear of replacement by another competitor, helping Microsoft grow to be the most profitable firm in the world for a time.

In a state of perfect competition, profits can only be maximized in the short-term by recouping one's Marginal Costs through one's Marginal Revenues. This is accomplished by maximizing output until these two numbers become closely equivalent to one another.

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