A market can be defined as a combination of sellers and buyers. There many types of markets structures for example; Monopolistic competition, Oligopoly competition, Duopoly competition, Monopoly competition and Perfect competition. In my case, am dealing with monopolistic competition market structure. In the market, sellers or firms supply their goods where the consumers, who could be either firms or individual customers of the goods. In the monopolistic market, no individual buyer or seller has total control over the market.
In this scenario there are many sellers, each commanding a little proportion of the supply of goods. There are also many buyers who control the demand of the goods and services. Both the buyers and sellers co-exist and depend on each other for the existence of the market. In a monopolistic kind of market there are many kinds of goods that can be traded. We will largely deal in the trade of sugar, for instance. Sugar is produced from sugarcane which grows mostly in the highland regions.
The price of sugar is determined by many factors; from various factors of production to the basic laws of demand and supply in the market. The cost of growing sugarcane is one of the outstanding factors that influence the cost of sugar in market. With increase of the cost of growing sugar the producer will pass the cost to the consumer which will affect the price of the commodity in the market. Technologies of production also affect the price at the market. With limited or outdated technology, the higher the cost of production becomes, and therefore this results in high prices of products in the market. The distance of the market from the manufacturing plants also affects the price of the sugar in the market. The shorter the distance the less cost of production which results to lower price in the market.
Competition in the market between sellers has a direct effect on price of the commodity. Many firms or vendors tend to lower the price of sugar in order to attract more customers.
The laws of demand and supply also determine the price of the sugar in the market. By the illustration of a demand and supply curve on the same scale the demand and supply curves intersect at an equilibrium point which is the market price.
The quality of sugar in the market is mainly determined by the competiton between the numerous sellers in the markrt.Each seller tries to provide a superior quality goods so as to attract more customers. In the monopolistic market, a great deal of innovation is channeled towards the marketing of goods. With sugar, most sellers package the sugar in attractive packs so as to generate more sales. Other innovations are the offers and discounts the firms give to their consumers as a way to increase sales.
In the monopolistic market, there is no voluntary exchange since there is only one good being traded. Sugar is manly bought by money hence voluntary exchange can not apply in this type of market. Voluntary Exchange is the willingness of the seller and the buyer to exchange goods for goods. In most cases the exchange leaves the buyer and seller in a better position than they were before the exchange.
It can be safely declared, therefore, that a monopolistic market is a more advantageous type of market to the consumer or buyer since he or she contributes in price-setting. In other types of markets, the buyer is usually disadvantaged since the seller solely determines the price of the commodity in the market.