they get a good meal, at a good price, then they’re satisfied. This customer satisfaction coupled with relatively low prices keeps the industry profitable. Another quality of perfect competition that may be overlooked, but is vital to this industry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopolies are concerned. There are numerous barriers to entry into monopolistic market structures, capital being one of the most prominent barriers. If a new franchise an offer the consumer a quality product at a reduced price, then the chances of success are greatly increased. For example, Chanello’s and Little Caesar’s offer discounted pizza prices, and maintain the same quality as other pizza chains. These companies spend less on advertising and more on the actual product. That’s a very important concept in this industry, because their quality product at this discounted price gives them a niche in the market. Once a company establishes a niche, they become more visible to the consumer, thereby creating more demand, which leads to greater revenue. 2. Analyze sports franchises from the point of view of a monopoly. Sports franchises fall within the market structure of monopolies. Most professional sports teams fit most or all of the characteristics of a monopoly. For each sport, there are a limited number of teams and new entries into the league are few and far between. Also, there are many barriers to entry into the market, including large initial capital investment, dominance by one or few firms, and other legal issues that must be considered. An investor would initially need cash for payroll of players, payroll for management, advertising, playing facility, and many other miscellaneous costs. The new franchise owner would need to be very wealthy and have the back...
