Lowes in the Marketplace
Lowe’s in the Marketplace ECO415 Applied Economics in Business Student’s Name: Instructor, Date: Lowe’s In the Marketplace Lowe’s was ranked 42nd in the Forbes 500 top companies in 2009. It has grown into the 2nd largest home improvement retailer in the United States. In constant competition with Home Depot and other stores, Lowe’s must find a way to remain competitive in an oligopoly marketplace. It is important to understand not only what type of market Lowe’s operates in but also the advantages and disadvantages when reviewing margin and profits. Four Market Types Before delving into the specifics of Lowe’s, a review of the four market types should be conducted. Understanding how Lowe’s is part of an oligopoly marketplace and how it is not a participant in the other market types is important. The four types of markets are Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly. Monopoly’s market type occurs when there is one firm providing a unique manufactured good without similar substitutes. Entry into a monopoly type market is difficult and nonprice competition is unnecessary. “Nonprice competition involves firms trying to gain an advantage over one another by differentiating their products (Keat and Young, 2009).” Becoming the only business providing the service or product means that the public specifically has to purchase from this one company. An example of a monopoly would be the Public Utility Commission (PUC) in California. Unlike Texas, where residents have many companies to choose from for electricity, California receives their power bill from one central company. Oligopoly is similar to Monopoly however; there are several specific differences. A small number of firms in a marketplace that become mutually independent of each other are an oligopoly. Again, like
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