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Think about a firm that you may like buying products from (try to offer a unique example different from what your classmates have already identified)
Think about a firm that you may like buying products from (try to offer a unique example different from what your classmates have already identified). What industry does this firm belong to? For example, Apple would be in consumer electronics. What market structure would the firm you identified fall under? What are the names of other firms in this industry? Is it monopolistic competition, oligopoly, monopoly, or perfect competition? Justify your classification of the firm with your logic, and explained what impact this will have on their pricing power (or lack thereof) on their goods.
Expert Solution
I will use the example of tissue paper (commonly referred to as Kleenex).
- This product belongs to the pulp and paper industry, specifically the pulp and paper segment for household products.
- This industry falls into the Perfect Competition category. This is because there are many companies and brands producing tissue paper, ranging from brands like Kleenex and Scotties to generic brands such as Great Value (i.e. from Walmart). All products are relatively highly similar to each other and there is no information asymmetry between the buyers and the sellers. Therefore, this type of market will decrease the pricing power of firms since, if one brand decides to increase prices, there are multiple substitute brands to choose from that have a very similar utility.
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