Question

Subscribe Identify a particular industry (non-government) that meets the criteria for Pure Competition or Monopoly.

Explain clearly why you think the industry is in Pure Competition or is a Monopoly and evaluate it from perspectives of efficiency and equity. You may post to both categories, but are required to only select one.

Keep in mind there are four market structures and we study Monopolistic Competition and Oligopoly next week. Read the Discussion Instructions for Week 4 and identify the market characteristics, productive efficiency, allocative efficiency, and equity in the particular industry that you selected.

Answer 1

I want to choose Microsoft.

Market characteristics: In operating system, the Microsoft product, 'Windows' is having the Monopoly in computer world. It is having 85% of market share approximately. Generally it is having the monopolistic power due to the entry barriers to the other competitors.

Productive efficiency: The price of Windows 10 in market is very much greater than the marginal cost of producing it. So, having the monopolistic power Microsoft is the price decider here.

Allocative efficiency: allocative efficiency is a level where the output is equals with the input. That means the marginal cost is equal to the marginal utility. Although the price of Windows 10 is high, still the utility of this product is so high that the marginal cost equals with the marginal utility. That's why it can achieve the allocative efficiency.

Equity: The equity of Microsoft is good because the value provided by the brand minimises the the adverse effect of over pricing its product.
The current equity is 94.86 Billion on 31st March, 2019.