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Forms of Business Ownership and Market Structures Project
Transcript of Forms of Business Ownership and Market Structures Project
ease of management (less tasks to perform)
psychological satisfaction ( less regulatory requirements) Sole Proprietorship a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business Advantages Disadvantages Taxation (responsible for paying taxes from personal income tax rate)
Unlimited Liability (responsible for all debts or losses)
difficulty of raising capital (harder to reach enough people) Partnership Advantages a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses. Disadvantages start up (quick and easy to start)
type of partnerships:
General Partner: is fully responsible for the limited partners. They're liable for management of LPs (manager at a restaurant)
Limited Partner: only responsible for assigned job, not responsible for management.
(employees at that restaurant)
Silent Partner: association with company is not known by the public.
(stockholders for that restaurant)
articles of partnership
ease of attracting capital (one person tells their friend, friend tells their friend, and so on)
taxation responsibility of the acts of other partners
potential for conflict among partners Corporation Advantages A company or group of people authorized to act as a single entity (legally a person) and recognized as such in law. Disadvantage Ease of raising financial capital (advertising the crap out of the public)
Limited liability for owners (less stress for those involved) Difficulty and expenses of getting a charter
Subject to more government regulations
Separation pf management and ownership Market Structure THAT'S COMPLETE MARKET POWER Oligopoly A market in which many firms compete in the supply of a single product. Three primary features characterize a perfectly competitive industry: Perfect Competition There is a multitude of firms (buyers as well as sellers) all to small to have any individual impact on market price;
All firms aim to maximize profit;
Firms can costlessly enter and exist the industry Monopolistic Competition Large number of firms
Easy entry/exit Enter Exit Monopoly Market in which substitutable products are sold by many firms. So... No market power. Small amount of market power. Large # of firms
Easy entry/exit D P $ (few) Market is which a SMALL amount of firms sell differentiated or identical products. (Buyers) Global oil interdependence is a good example. Small amount of firms
Differentiated or Identical products
Difficult entry *Notice how OPEC is only located in 3rd world countries... Large amount of market power. (one) A market in which a product or service is sold exclusively by one group. There's several types of monopolies. So, let's say in the near future the flying car is released to the public. Do you think the creators are gonna let their ingenious idea get duplicated by a bunch of copy cats? no In order to prevent copy cats from doing their dirty work, the company issues a patent and declares sole ownership to that product.. a copyright. This is an example of TECHNOLOGICAL MONOPOLY. SmallVille Market (The only store in town, so you have no choice but to shop here.) This is an example of GEOGRAPHICAL MONOPOLY; because of the town's population, it's not financially feasible to consider building another store. Government Monopoly.. The s510 bill. A government will pass laws reserving a specific trade, product or service for government agencies. So, if this bill is passed, we're done. Oh, wait. It was.. Natural monopoly = Common sense monopoly It occurs when the type of industry makes it financially impractical for multiple companies to engage in the business. So if marijuana became legal everywhere, what would happen to the tobacco companies? People would obviously buy what's better for the body and stop buying what's bad for them, right? (essentially it is.)
Thinking about how it could help the economy, dramatically decrease the crime rate, and slow down the growth of lung cancer (depending how it's consumed) it would run the tobacco companies straight out of business, and allow law enforcement to focus on much serious drugs, like meth and cocaine. Hmmmm