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How does a market structure positively or negatively affect a firm?
How does a market structure positively or negatively affect a firm?
Expert Solution
Market structure is essential since it determines the success rate of a business in an economy. For instance, businesses cannot change the market structure and have to analyze it to gain a competitive advantage in the market. Moreover, on the positive side, market structure determines the accessible markets where consumers value certain products. These markets enable the firm to deliver specific commodities and increase their profitability in the market. Besides, if the business targets an inaccessible market, it will use higher marketing costs and lower their commodities. Moreover, on the negative side i.e., in perfect competition, firms cannot set their prices hence reducing their progress rate in the market.
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