In Brazil, coffee beans are cultivated by a very large number of small farms that all produce beans of similar quality and taste at similar costs. Land is still plentiful, and the equipment required is affordable enough to allow new farming businesses to start up under current market conditions. However, better production techniques, especially alternatives to polluting fertilisers and deforestation, are needed in this industry. Using the theory and models of industry structure, examine this industry. Should government be worried about any aspect of how an industry with this market structure will perform?
In Brazil, coffee beans are cultivated by a very large number of small farms that all produce beans
of similar quality and taste at similar costs. Land is still plentiful, and the equipment required is
affordable enough to allow new farming businesses to start up under current market conditions.
However, better production techniques, especially alternatives to polluting fertilisers and
deforestation, are needed in this industry. Using the theory and models of industry structure, examine
this industry. Should government be worried about any aspect of how an industry with this market
structure will perform?
Let's identify what kind of an industry/market structure this is based on the given characteristics. Once we determine the type of market, we will move on to discuss if government should worry how this industry will perform.
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