The small island of Tap, inhabited by the Tapese people, produces a single variety of corn. At the present time, each farmer produces his or her own corn, harvests it and carries it to the market for sale. On any market day in Tap, you will find many different sellers of corn. Competition between the corn sellers is very fierce-as a result, corn prices are quite low. Mega Company, the local beef producer, has announced that it wants to get into the corn business. The president of Mega Company believes that it would be more efficient to bring together all the farmers’ corn at one large production facility where quality and packaging can be better controlled. Thus Mega Company acquires a license to enter into the corn industry, and begins buying all the corn from the individual farmers, packaging it, processing it and selling it in the market. The people of Tap are quite happy with the new packaging, and the uniform quality of the corn. However, the Tapese people also notice that the price of corn on the market begins to rise.
Using your knowledge of market structures in microeconomics, explain the changes in the corn industry in Tap.