Index IntroductionMarket StructuresMonopoliesOligopoliesMonopolistic CompetitionConclusionBibliographyIntroductionThis essay will briefly explain the different market structures and evaluate their advantages and disadvantages. It will connect the theory and case study of market structures and there will be two main market structures, oligopoly and monopoly, which will be explained by connecting the case study on Apple and Spotify. This report will explain how the disadvantages of monopoly give way to oligopolies and how the disadvantages of oligopolies give way to monopolistic competition. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay Market Structures Defined as the amount of competition that exists in the market between different manufacturers (Palmer and Hartley, 2012). “A market involves the exchange of goods and services between producers and consumers and includes goods and services considered substitutes” (Harrison, 2014). Durkheim (2013) states that the number of competing firms in a market is probably the most important in determining the profitability of each of them. The barriers to entry and exit from a market may depend on the profit or loss in that specific market. To explain further, looking at the case study, Spotify was the first and foremost provider for consumers in the music market. Due to the success and profit acquired by Spotify, Apple decided to launch Apple Music to rival them. Before Apple ventured into the music market, it held a monopoly in the smartphone market. The same goes for Spotify, which was an oligopoly in the music market. Once Apple merged, they both became the top two providers of consumer services in the music market, MonopoliesMonopolies exist when there is only one supplier or manufacturer for a particular market (The Economic Times, 2019). There are no substitutes for these goods, so in the long run they generate abnormal profits (Palmer and Hartley, 2012). Due to high barriers to entry, such as high costs, this discourages the creation of new companies. It can be argued that Apple was a monopoly in 2014. Apple controlled a large share of the smartphone market. The first advantage of monopolies is technological advantages. Most consumers in the smartphone market used Apple smartphones because they had technological advancements. The second advantage is that monopolies have high economies of scale and high levels of production, so any new entry into the market will be squeezed out due to the large market share controlled by these monopolies. By gaining a large market share, monopolies have complete control of the distribution process in the market. This develops into brand loyalty. Applying this to the case study we can see that both Spotify and Apple Music have reached an immediate equilibrium point. This is where neither company will lower prices as they risk not making enough profits to stay ahead of their competitors. Now both offered their consumers the same service at the same price. However, the reason why both are successful and do not have a big difference in that success is due to brand loyalty (BBC News, 2015). Spotify users would not abandon the subscription they had for a long time, and Apple users, as well as previous iTunes users, would remain loyal and use Apple Music. However, this can create some inconveniences. Being a monopoly means setting the price for a certain product and having no competition. This could mean that consumers areeffectively paying much more than the actual value of the product. Another disadvantage of monopolies is the high level of market control. This means that companies will not improve or improve themselves because they are comfortable with the brand loyalty they have with customers. They may spend less on research and development, fail to improve their efficiency and set high prices (Palmer and Hartley, 2012). These disadvantages give way to oligopolies. Oligopoly An oligopoly occurs when the market is dominated by a relatively small number of sellers (tutor2u, 2019). They are generally found in industries where economies of scale and greater competition exist. There is no formal agreement to keep prices the same, but a dominant company sets the price for consumers and other companies usually follow suit. In this case Spotify was the dominant company in the market and we can see that Apple followed the established price. BBC News (2015) stated that Apple Music "will offer users a three-month free trial, after which it will cost the same as market leader Spotify". This is called dominant price leadership. An advantage of oligopoly is that if a company is doing well abroad, in the domestic market, the profit can be used to compensate in the international market. The disadvantage of an oligopoly is that it is not in the consumer's interest. If economies of scale exist, these should be reflected in pricing. This disadvantage gives way to monopolistic competition. In this case study, Spotify competes in their respective streaming markets with Apple in an oligopolistic market. Spotify could benefit from Apple's pricing fragility as it can achieve price stability. These benefits allow consumers to start planning the expenses necessary to reduce their debt (Chief, 2019). Spotify has thus maintained its ever-increasing profit margin from consumers by providing more artists' styles than Apple's music. Since few market participants compete for consumers, companies are encouraged to provide the best information possible to attract considerable attention to their products and services. In this situation, it can be argued that Apple wants to sell itself as a better brand than its competitors, such as Spotify. This could be the reason why Spotify attracts more users and more people to Apple music, as Apple needs to focus on its other products such as mobile devices, watches and more. This could be the main factor in Apple. Unsurprisingly, as Spotify states in the case study, it has raised $526 million (£334 million) in new funding and is now valued at $8.5 billion. Monopolistic Competition Monopolistic competition is a market structure that combines elements of monopoly with competitive elements. markets (Pettinger, 2019). A monopolistic competitive market is a market with freedom of entry and exit, but firms can distinguish between their goods. This ties into the case study as streaming music is now available on multiple platforms, some users will like to listen to their music on sites like YouTube, the largest video sharing network in the world. All this is due to the drawbacks of monopolies and oligopolies, which have transformed the market into monopolistic competition. Studies show that the UK streaming market is expected to grow by 5-7% every year, reaching £1.1 billion in 2023. This implies that the market is growing every year, allowing new companies to enter the world of music streaming. One of the greatest advantages created by the monopolistic market is that it offers greater choice and variability to. 2019]