audioecon   Smart listening for students of economics

Link: http://www.npr.org/blogs/money/2010/10/08/130436221/the-friday-podcast-buttons-and-other-connectors

Summary: A profile of American manufacturing by visiting two U.S. factories, one struggling to compete in a global economy, and another thriving.

Original Air Date: October 8, 2010

Length 26:35

Main story content begins: 2:22

Discussion Prompt: Consider the two firms discussed in the podcast in the context of different types of market structures (ex. monopolistic competition, perfect competition, oligopoly, monopoly).  What type of market structure do you think each firm is operating in? Explain why you think this using the characteristics of each market type and be sure to share your analysis.

Follow-up Prompt: Review your peer’s discussion posts. Try to come to a further developed and agreed upon idea of what type of market structure each firm might be operating.  Here are some factors to consider: (1) number of firms – note that how we count the firms depends on how we’re defining the product/market.  Note that many companies compete in a global market now, so location is not as important as the substitutability of the products of potential competitor firms. (2) type of product produced: note that in the oligopoly structure firms can be producing products that are identical to one another OR differentiated, that is not as important for oligopoly as is the fact that there are a few firms controlling the market; for monopolistic competition the products are differentiated, but relatively substitutable – so that they can be considered within one market; finally monopolists have a unique product with no close substitutes (substitutes that may exist are not close). (3) barriers to entry / ease of entry: one of the key things to consider here is the presence of patents, which serve as barriers to entry for a period of time. Note that in monopolistic competition there are low/no barriers to entry, with higher barriers in oligopoly and highest in monopoly.  With patents we also have to think about whether they are making a product differentiated or making it completely unique.