Market Structure Essay

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Market Structure

My franchise is Auntie Anne's Hand Rolled Soft Pretzels. The industry in which Auntie Anne's Hand Rolled Soft Pretzels operates is characterized by a state of monopolistic competition. The characteristics of monopolistic competitive markets are as follows. There should be many market participants. The company sells snack foods in a quick service format, and there is a near endless variety of both quick service restaurants and snack items. The endogenous market for pretzels is limited -- almost every purchase decision will feature a choice involving some other snack food. This broadens the scope of competition to include a wide range of competitor and Auntie Anne's competes by differentiating itself against these competitors. This differentiation means that the products within the snack market are heterogonous. The firms in these markets are price makers, and Auntie Anne's is as well.

There is ample freedom of market entry and exit, another characteristic of the state of monopolistic competition. The differentiation in the market means that buyers lack perfect information, and it also helps to facilitate the condition where the substitutes are different but serve the same function. For example, a cookie or a bag of chips would be a very different product from a pretzel but all serve as snacks. Thus, the market in which Auntie Anne's Hand Rolled Soft Pretzels competes meets all of the defining characteristics of the monopolistic competition market structure.

2. There are a wide range of competitors that our company faces. The closest competitors are also in the QSR industry offering snacks. Depending on the geographic location, these competitors can range from other baked goods like cookies or cinnamon buns, to ice cream chains or even meal-oriented QSR restaurants, since some will offer snack portions. Other snack products… [end of preview; READ MORE]

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