Market Structure
This discussion will focus on the restaurant industry and the wireless service industry. The restaurant industry operates under monopolistic competition. This is because it is usually easy for new entrants to enter this market and leave at their own time. Restaurants seldom change their services and service types because of new entrants (Cosman & Schiff, 2019). It is always apparent that each restaurant has a monopoly over the other. Each restaurant is at liberty to set its prices and determine the quality of food and service delivery without being influenced by its completion level. It is only possible to have perfect competition in the restaurant industry if two restaurants operating in the same locality have precisely the same menu and offer the same types of services (Cosman & Schiff, 2019). This is usually the case of fast-food restaurants like McDonald’s and Burger King whenever they are located in the same place. Two Burger King outlets located in the same locality may offer a perfect competition but support oligopoly.
The wireless service industry, especially in Canada, can have both monopoly and oligopoly market structures. Because monopoly by a single company is a tough feat to achieve in this highly competitive era, the term monopoly is used in this case to describe the firms that have enough sway to influence the investment and price within the industry. Bell, Rogers, and Telus are the largest companies within the wireless service industry in Canada, and they show monopoly since they dictate the prices in this industry (Klass & Winseck, 2019). Again, this industry is said to be oligopoly since these three firms are indistinguishable. New entrants would have minimal impact on the three leading firms. These companies tend either merging with or acquiring new companies in the industry. Telus, for example, acquired Clearnet Telecommunications Inc. and BC Telecom (TELUS, 2020). With a few changes, the BC Telecom wireless service industry would be able to move to perfect competition. A strict law will have to be enforced by the Competition Bureau of Canada to form a perfectly competitive market. Such a law would ensure that prices are reduced for Canadians and that new entrants are not barred from making their way into the market.
References
Cosman, J., & Schiff, N. (2019). Delivery in the city: Evidence on monopolistic competition from New York restaurants. Munich Personal RePEc Archive.
Klass, B., & Winseck, D. (2019). Competition in Canadian mobile wireless markets: Pricing problems and wholesale solutions. Telecom Notice of Consultation CRTC 2019-57.
TELUS. (2020). Mergers and acquisitions. Retrieved from https://www.telus.com/en/about/investor-relations/investor-services/mergers-and-acquisitions