C4_M3

Assess the circumstances affecting competition in the industry of the firm you are working with all along this course. Which of the four market structures studied in this section (perfect competition, monopoly, monopolistic competition and oligopoly) can the industry be identified to? Build a table showing the correspondence between the features observed in the industry that you are studying, and those of the theoretical framework to which you assimilate it.

The result of the Herfindahls index in 2017 of this market was 0,048367 (4,83%). This means that there is not concentration of power in the market, but the opposite. Our result is located in the range of Herfindahls that indicates that perfect competition or monopolistic competition are usually below 0,2 (20%), that is our case. There are so many companies and they do not concentrate a lot of power separated.

Remember that the 5-firm concentration ratio in 2017 was 0,3953 (39,53%). The most important five companies of the market share less than the 40% of the market, so this means the power they have is not high.

What we have to analyze now is if we are in a perfect competition or in a monopolistic competition, because in both cases there are many sellers, as in this case. In this point it is important to remember that in the past assignments we saw that the different industries sell products that are similar, but that are seen by customers are different in some ways: quality, accessibility, comfortability, design, etc. Also, the prices are very different among the different products they sell, because they offer almost different products depending on the necessity of the customers. They are always trying to gain customers and sales by differentiating their products and giving them a competitive advantage for the customers in contrast to their competitors.

To sum up, we can observe all the information in this table:

There are many sellers.	As we can see, 125 companies in the same sector just in Navarra are a lot in terms of competition.
No concentration of power and sales.	The 5-firm concentration ratio analyzes this, because
Each seller offers a differentiated product.	Quality, accessibility, comfortability, design, etc. are facts that customers take into account when they are willing to buy a new car, specially a new electric car.
Vertical differentiation.	One car of one brand is unambiguously better or worse than competing products, because of the adjectives described before. Not only some customers see this differentiation, but the whole poblation.