Differentiating Between Market

Structures
ECO/365
October 19, 2015

Differentiating Between Market

Structures
Competitive balance between market

structures distinctive in each industry. The

characteristics of a market will give you an
idea of as to the type of market you are
working with. For this PowerPoint slide I will be
focusing on Jacobs Engineering Group. The
company operates in a variety of industries
mainly focused on the technical service
industry.

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Market Structure and Their

Characteristics

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Market Structure
The market structure can be

defined by the number of firms;

negotiation strengths in terms of
ability to set price; the amount of
concentration among them; the
amount of differentiation and
individual products; and the ease
or difficulty of entering and exiting
the market.
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Oligopoly
Characteristics
find only a small number

In Oligopoly you would

of sellers that is few

enough that any
individual can affect the
market.

Ability to set own prices

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Oligopoly Characteristics
Oligopolies like to

maintain their
position of
dominance because
its too costly for
rivals to enter the
market.
Oligopolies (just like
monopolies) have
barriers to prevent
from anyone to
enter the market.
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Market Structure
Jacobs Engineering

Group is classified as a
technical service
industry.
The industry is mainly
dominated by a few
competitors.

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Jacobs Engineering Group

Jacobs Engineering Group is one of only a few

firms that dominate their industry. This means

that it cannot be a Monopoly because there
are multiple firms and it cannot be perfect
competition because there are few companies
competing. Monopolistic Competition is also
ruled out because there aren't many firms
competing with similar products/services.

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Strategic Decision Making

Strategic Decision

Making - Taking explicit

account of a rivals
expected response to a
decision you are
making. (Colander,
2013)

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Competitive Strategies

In oligopoly, a price
competition can turn into
a price conflict reducing
profits. If one firm decides
to increase its price, the
other firms may not
follow and in turn the
other firms will gain the
customers. The firm that
raised prices will see a
drop in quantity
demanded, i.e. the
demand is more elastic
when the firm decides to
increase prices.
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Competitive Strategies

If a firms in an oligopoly
market structure decided
to drop their prices, the
other firms know that
they will lose a lot of
market shares if they
dont drop their prices, so
they drop their prices as
well. Because most
customers are
comfortable where they
are, the company that
dropped the prices in the
first place will see very
little increase in demand
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so the demand is

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Recommendations
Jacobs Engineering

Group should make the

decision to work together
with other firms and
make their services
inelastic. By adding a
larger variety of services
and making it unique,
Jacobs Engineering
Group will proceed in
making
profits.
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Recommendations
In the technical service
industry, Jacobs Engineering
Group is 2nd the leader when
it comes to its ranking.
Jacobs Engineering Group
was in line to collaborate with
a large Engineering, Design
and Construction firm URS.
The alliance would have
given Jacobs Engineering
Group the added value of
making it unique. AECOM
being a larger company
bought URS.

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Conclusion
Oligopoly is a common economic
system in todays society. The
technical service industry is a great
example of an oligopoly market
structure due to the small number of
firms, ability to set prices, barriers
that make it difficult to enter the
market and having either identical or
differentiated products.
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References

Colander, D.C. (2013). Economics (9th ed.). : McGraw-Hill/Irwin.

Oliver, Antony (2014). Shockwaves across industry as AECOM agrees $6bn deal to buy URS.
Retrieved October 18, 2015, from
http://www.infrastructure-intelligence.com/article/jul-2014/shockwaves-across-industry-aecom
-agrees-6bn-deal-buy-urs
.
Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 30: Oligopoly [Video file].
Retrieved October 18, 2015, from https://www.youtube.com/watch?v=ElBF2D7IHAI.
Industry center - Technical Services. (2015). Retrieved October 18, 2015, from http://
biz.yahoo.com/ic/ll/767mkt.html.
Market Structure. (2015). Retrieved October 18, 2015, from
http://www.businessdictionary.com/definition/market-structure.html.
Mary, McGlasson [MJMFoodie]. (2015, October 18). Episode 25: Market Structure [Video file].
Retrieved October 18, 2015, from https://www.youtube.com/watch?v=9Hxy-TuX9fs
Jacobs. (2015). Retrieved October 18, 2015, from
http://invest.jacobs.com/files/doc_financials/summary/2014/Updated/Jacobs2014AnnualReport
_v001_m46mfs.pdf.

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