Economics - Virgin

ECONOMICS

Richard Branson is a successful businessman has dabbled in a wide range of markets including the soft dink market, airline market, home media market and various others. In 1999 he entered the mobile phone market - with Virgin Media - which is dominated by a handful of organisations such as Vodafone and Orange. A market with this type of structure is said to be an oligopoly making competition for a sizeable percentage of the market share fierce. In this essay I will explain characteristics of two market structures; oligopoly and monopoly and describe the price and output behaviour in these market structures. Will highlight two roles which profit would have played in encouraging Richard Branson to enter into the mobile phone market, will analyse two goals which a firm like Virgin media, and finally I shall discuss what influences the shape of total cost, average cost and marginal costs in the short run.

Richard Branson and is entering into a market which is believed to be an oligopoly with Virgin Media. An Oligopoly is a market which is dominated by a few large suppliers of the same commodity. Oligopolistic markets can be characterised in several ways. Firms will ferociously try to differentiate their products from competitor’s products through its advertising and its other marketing tactics. Firms in an oligopolistic market will look for price stability, in terms of what is competitor’s supply, with short periods of keen price competition to act as a catalyst for an immediate short-term increase in its market share. Another characteristic which exist in an oligopoly is barriers to entry. This is due to the fact that with the market being dominated by large organisations which have achieved economies of scale making it very expensive and time-costing for a new business to attempt and launch its own product into the market.

BEHAVIOUR OF PRICE AND OUTPUT