Question

What kind of market structure does Costco falls under? Explain why you picked that market structure.

Answer 1

Costco exists in an oligopoly market structure. The greatest share of the market is Walmart's. It exists in a market with a few suppliers. Oligopoly stifles competition through adverse business tactics - collusion, price cutting. Smaller retailers cannot sell at that price as these have been driven out of the market. Entry in this market is difficult, organizations can dictate prices. At Cosco, one buys in bulk, buy good quality products, at a discount. Costco is a large organization with stores across the country. Costco has warehouse-style stores, and, sells bulk goods. Costco exhibits a high degree of cost control.