Assignment title: Market Model Patterns of Change Student’s name: Professor’s name: Course title: Date: 1. Describe the industry and explain the general pattern of change of the particular market model. In the past, some industries in the US were dominated by monopolies (one big supplier); this was due to the “barriers to entry at that time” into that particular industry such as government regulations as well as high costs of setting up business investments. (James E. Wells, Jr. 2004:09).The government however moved to demolish monopoly and encourage competition so as to protect the US consumers. Companies had to follow rules and regulations established under the Sherman's HammerSherman Antitrust Act that was passed in the year 1890 that banned trusts as well as monopolies. United States Monopolistic Market conditionof the oil industry in the early 90s’ · Monopoly is an economic market condition where one producer/seller dominated the market. · High prices were charged since there was no competition · High barriers to entry that was due to technology, patents, distribution overheads, government regulation or capital-intensive nature of the industry. Chosen company: Standard oil (US). The US oil industry The oil industry in the US dated back to the early 19th century. Oil was first discovered in Pennsylvania in 1859. Standard Oil was amongst the first companies to be established during the first discoveries. It was formed in 1870 and was the only dominating company that produced oil, refined, transported and marketed. It remained as the largest oil refiner in the United States for some years until its monopolistic dominance was broken up by the Supreme Court in the year 1911.(John H, 1986:103). Due to public outcry the court ruled that the company be dissolved under the Sherman Antitrust Act. It was then split into 34 companies. The major ones were Jersey Standard which then became Exxon and Socony which then became Mobil. Over the decades, the US oil industry has been characterized by new entries (local and foreign), mergers, acquisitions, break ups as well as split-offs between companies. (James E. Wells, Jr. 2004). Now there are now multiple oil companies (local and foreign) in the United States which changed the market structure from a monopolistic type to perfect competition.(James E. Wells, Jr. 2004). United States current perfect competitive market in the oil industry. · Perfect competition is a market structure where there are many buyers and sellers. · Products in the Market are similar. · Profits earned are normal. · There are no barriers to entry or exit. · There is market knowledge of price and products in the market. 2. Hypothesize the basic short-run and long-run behaviors of the model in the industry you havechosen in a “market economy.” Short-run behavior of a company in a perfect competitive market. Because of low demand for the products in the short-run, new companies must decide by how mu ...

1. Assignment title: Market Model Patterns of Change
Student’s name:
Professor’s name:
Course title:
Date:
1. Describe the industry and explain the general pattern of
change of the particular market model.
In the past, some industries in the US were dominated by
monopolies (one big supplier); this was due to the “barriers to
entry at that time” into that particular industry such as
government regulations as well as high costs of setting up
business investments. (James E. Wells, Jr. 2004:09).The
government however moved to demolish monopoly and
encourage competition so as to protect the US consumers.
Companies had to follow rules and regulations established under
the Sherman's HammerSherman Antitrust Act that was passed in

2. the year 1890 that banned trusts as well as monopolies.
United States Monopolistic Market conditionof the oil
industry in the early 90s’
· Monopoly is an economic market condition where one
producer/seller dominated the market.
· High prices were charged since there was no competition
· High barriers to entry that was due to technology, patents,
distribution overheads, government regulation or capital-
intensive nature of the industry.
Chosen company: Standard oil (US).
The US oil industry
The oil industry in the US dated back to the early 19th century.
Oil was first discovered in Pennsylvania in 1859. Standard Oil
was amongst the first companies to be established during the
first discoveries. It was formed in 1870 and was the only
dominating company that produced oil, refined, transported and
marketed. It remained as the largest oil refiner in the United
States for some years until its monopolistic dominance was
broken up by the Supreme Court in the year 1911.(John H,
1986:103).
Due to public outcry the court ruled that the company be
dissolved under the Sherman Antitrust Act. It was then split into
34 companies. The major ones were Jersey Standard which then
became Exxon and Socony which then became Mobil. Over the
decades, the US oil industry has been characterized by new
entries (local and foreign), mergers, acquisitions, break ups as
well as split-offs between companies. (James E. Wells, Jr.
2004).
Now there are now multiple oil companies (local and foreign) in
the United States which changed the market structure from a
monopolistic type to perfect competition.(James E. Wells, Jr.
2004).
United States current perfect competitive market in
the oil industry.
· Perfect competition is a market structure where there are

3. many buyers and sellers.
· Products in the Market are similar.
· Profits earned are normal.
· There are no barriers to entry or exit.
· There is market knowledge of price and products in the
market.
2. Hypothesize the basic short-run and long-run behaviors of the
model in the industry you havechosen in a “market economy.”
Short-run behavior of a company in a perfect competitive
market.
Because of low demand for the products in the short-run, new
companies must decide by how much they will produce. Low
demand forces the company to price its products below the
market price. At first, fixed costs are usually high and firms use
the shut-down rule (if revenue falls below the total costs). It
takes long to break even because prices are lowered as
compared to the prices of competitors. Market share is
obviously low at first. Costs of production are usually high due
to set up costs, staffing, conducting research as well as
marketing the new products in the market.(Roger, A. 2002:206)
Long-run behavior of a company in a perfect competitive
market.
Here, the company has gained market knowledge and knows
how much to produce and charge for their products. The demand
for the companies’ products is high because consumers are
aware of the companies’ existence as well as its products. Costs
tend to be low because of cost cutting measures and the
company benefits from economies of scale where costs of
producing a single unit reduces due to increased production.
Companies’ break-even and profits tend to rise when due to
increase in prices as well as low costs of production. Marketing
of products is reduced because consumers are aware of the
company and what they are offering.(Roger, A. 2002:207)
3. Analyze at least three (3) possible areas for the industry that

4. could lead to transaction costs, andexplain each in detail.
Transaction cost is the cost incurred when making an economic
exchange e.g. cost incurred by companies while participating in
the market.
Here is an analysis of transaction costs by Ronald Coase (1937).
· Search and information costs: Companies will spend
money searching for information from the market; such
information could be information on market prices, information
on origin of the demand of the companies’ products,
information on the various changes in the tastes and preferences
of consumers as well as searching for information concerning
competitors marketing strategies as well as information
regarding suppliers. (Ronald Coase, 1937).
· Bargaining and decision costs: Managers spend money
travelling and meeting with potential buyers, it also costs them
to make telephone calls to customers while striking sales deals.
It also costs the company when negotiations are taking long as
the costs of storing the products they are negotiating for will
have to be incurred depending on the lengths of negotiations.
For the oil industry, most oil products are auctioned through the
New York Stock Exchange; products traded here are charged a
transaction fee by the institution. (Ronald Coase, 1937).
· Policing and enforcement costs: It costs companies to draft
sales contracts as well as enforce them. It also costs them to
comply with government regulations such as environmental
laws during product delivery. It also costs them while dealing
with fraudsters as well as customers that do bad practice.
(Ronald Coase' 1937).
4. Speculate about the behavior that could result from these
transactions and propose at least two
(2) strategies for dealing with them.The cost of transactions will
depend on the quantity or value of goods being transferred.
(Michael, D. 1994).
Transaction costs influence the structure of markets as well the

5. nature of intermediary networks.(Michael, D. 1994).
Transaction costs determine the medium of exchange, in an
economy.(Michael, D. 1994).
Strategies for dealing with them
Transaction costs can be reduced by increasing the volume of
goods being transferred. Suppliers can negotiate a fix
transaction costs irrespective of the volume of goods being
transferred.Companies should move intermediary networks to
where transaction costs are low. Suppliers should embrace
electronic trading where transaction costs are low such internet
trading.Suppliers should choose a medium of exchange whose
transaction cost is low.
5. Collect costs, revenue data, or other data from the industry
that you deem relevant. Explain howyou would modify the data
in order to make it relevant to decisions a manager must make.
Since costs of production keeps gone up, oil companies should
outsource some of their activities such as drilling and
transportation.(Matthew, Y. 2004).
· 60% of oil consumed in the US is imported and it is likely
to increase. Managers in this industry must thus take up the
advantage of a local deficit and increase their production.(James
E. Wells, Jr. 2004:06).
· International crude oil prices have increased from $ 80 to $
100 within the last one year, thus managers must take advantage
of the good price before they plunge as a result of reduced
global growth. (Turner.2008).
· Since US oil reserves are diminishing and the government
is restricting new drillings in protected areas, oil companies
must search for alternative sources of energy such as wing and
solar.(Turner.2008).
· Since the consumption of oil is increasing, managers
should increase production especially during the winter seasons

6. when the demand for heating goes up. (Matthew, Y. 2004).
· In resent pasts, oil crisis have been an occurrence where
prices rise above $ 120 a barrel. Thus oil companies should
have strategic reserves to prevent future occurrences of effects
brought about by oil crisis.(Turner.2008).
6. Explain the major factors that affect the degree of
competitiveness in your industry. Use the datato develop at
least three (3) measures (e.g., productivity measures) to show
how the industry isevolving.A wave of mergers is affecting the
degree of competitiveness, e.g. the merger between Exxom and
Mobil; two producers of petroleum that were large. (James E.
Wells, Jr. 2004:02).
Dramatic price swings in the global world crude oil. (James E.
Wells, Jr. 2004:02).
As well as limited refining capacity relative to the demand.
(James E. Wells, Jr. 2004:02).
Measures to show how the industry is evolvingIn order to deal
with mergers, refiners prefer to deal with large distributors as
well as retailers. This has further motivated the consolidation in
the distributor and the retail markets (basically focusing more
in the downstream division). (James E. Wells, Jr. 2004:02).
In order to deal with price swings, managers propose to increase
production when prices are high and reduce their production
capacity when prices are low. (James E. Wells, Jr. 2004:04).
Having strategic reserves that can satisfy demand for a number
of months so as to cater for high demand is always a measure
that has been put in place. (James E. Wells, Jr. 2004:03).
Index
GAO-(US) General Accounting Office.
References
James E. Wells, Jr (2004). Mergers and Many Other Factors
Affect U.S. Gasoline Markets. Pdf.
John H, Gibson (1986). U.S.oil production, Diane Publishing.
Matthew Yeomans (2004). Oil: Anatomy of an Industry. New

7. press publishers.
Assignment 3: Expansion and Merger
Due Week 8 and worth 240 points
This paper is a continuation of Assignment 2.
Assume that the industry you wrote about in Assignment 2
wants to expand and that its only option is a merger. Now the
industry is confronted with government regulations to oversee
the merger.
Write a four to five (4-5) page paper in which you:
1. Explain why government regulation is needed, citing the
major reasons for government involvement in a market
economy.
2. Justify the rationale for the intervention of government in the
market process in the U.S.
3. Assuming that the merger faces some threats and that the
industry decides on self-expansion an alternative strategy,
describe the additional complexities that would arise under this
new scenario of expansion via capital projects.
4. Analyze how the different forces will come together to create
a convergence between the interests of stockholders and
managers.
5. Speculate about the implications for the goals of the firm as
to whether to maximize the industry’s profits or to create more
value for the shareholders.
6. Use at least three (3) high-quality academic resources in this

8. assignment. Note: Wikipedia and other Websites do not qualify
as academic resources.
Your assignment must follow these formatting requirements:
• Be typed, double-spaced, using Times New Roman font (size
12), with one-inch margins on all sides; references must follow
APA or school-specific format. Check with your professor for
any additional instructions.
• Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the
date. The cover page and the reference page are not included in
the required page length.
The specific course learning outcomes associated with this
assignment are:
• Apply macroeconomic concepts to changes in a national
economy and how they affect economic growth, inflation,
interest rates, and wage rates.
• Identify the economic impact on a company’s operations of
the macroeconomic concepts.
• Use technology and information resources to research issues in
managerial economics and globalization.
• Write clearly and concisely about managerial economics and
globalization using proper writing mechanics.
Below is the assignment No.2 Requirements and solution of the
assignment no.2 is attached in other file. See that file and
prepare this assignment. Thanks
Assignment 2: Market Model Patterns of Change
Due Week 4 and worth 280 points

9. Choose and research an industry where there has been a pattern
of change in a particular market model(monopoly, oligopoly,
etc.).
Write a four to five (4-5) page paper in which you:
1. Describe the industry and explain the general pattern of
change of the particular market model.
2. Hypothesize the basic short-run and long-run behaviors of the
model in the industry you have chosen in a “market economy.”
3. Analyze at least three (3) possible areas for the industry that
could lead to transaction costs, and explain each in detail.
4. Speculate about the behavior that could result from these
transactions and propose at least two
(2) Strategies for dealing with them.
5. Collect costs, revenue data, or other data from the industry
that you deem relevant. Explain how you would modify the data
in order to make it relevant to decisions a manager must make.
6. Explain the major factors that affect the degree of
competitiveness in your industry. Use the data to develop at
least three (3) measures (e.g., productivity measures) to show
how the industry is evolving.
7. Use at least three (3) high-quality academic resources in this
assignment. Note: Wikipedia and other Websites do not qualify
as academic resources.
Your assignment must follow these formatting requirements:
• Be typed, double-spaced, using Times New Roman font (size
12), with one-inch margins on all sides; citations and references

10. must follow APA or school-specific format. Check with your
professor for any additional instructions.
• Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the
date. The cover page and the reference page are not included in
the required assignment page length.
The specific course learning outcomes associated with this
assignment are:
• Apply the concepts of supply and demand to determine the
impact of changes in market conditions in the short run and long
run and the economic impact on a company’s operations.
• Use short-run and long-run firm production and cost functions
to evaluate the impact on industries.
• Analyze how production and cost functions in the short run
and long run affect the strategy of individual firms.
• Use technology and information resources to research issues in
managerial economics and
globalization.
• Write clearly and concisely about managerial economics and
globalization using proper writing
mechanics.
Grading for this assignment will be based on answer quality,
logic / organization of the paper, and
language and writing skills, using the following rubric.