In five pages this paper analyzes the SCP model in this economic theory overview. Five sources are cited in the bibliography.
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of the market structures and the variances that can be found across industries. The SCP Model is an important economic trend that is in widespread use today. THE
SCP MODEL The SCP model in todays business and economic outlook "remains very influential in industrial and competition policy" (Economics of the Firm PG, 2002). The Structure-Conduct-Performance of any
industry dictates how it will succeed economically. The structure of a market is made up of the various sellers in a certain industry including the number, the amount
of competition, and the products being produced. The conduct aspect is that which involves how a product is marketed. This includes both pricing and advertising. The performance
can be rated on marginal cost pricing, also known as "allocative efficiency" (Economics of the Firm PG, 2002). STRUCTURE The number
of sellers, the product differentiation and the barriers to entry are all the parts of the economic model that make up the structure. Differentiation implies a better or different
product or service (or perceived as different) from others. With differentiated quality as the target. For instance, does one ignore costs? Quality imperatives demand a strategy equating the
product with desirable quality standards. Differentiation can earn above average profits even in a slow growth or declining market (Porter 1998). Perfect competition is one in which
the market structure is one that has many sellers and buyers. The firms produce a homogeneous product and there is free entry and exit of these firms to and
from the industry. The firm in a purely competitive market faces a perfectly elastic demand curve at the price determined by equilibrium in the market (Amacher 1983).