OLIGOPOLIES AND MONOPOLIES. Monopolistic Competition Large number of potential buyers and sellers Differentiated product (think cellphones) No barriers.

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Presentation transcript:

OLIGOPOLIES AND MONOPOLIES

Monopolistic Competition Large number of potential buyers and sellers Differentiated product (think cellphones) No barriers to enter or exit

Monopolistic Competition Example Restaurant Industry Lots of people opening and running restaurants Each company has a low market share (amount of market they control) The products they sell are very similar LOTS of information available (advertising and reviews) Fairly easy entry into the business Very little control over prices (supply and demand)

Oligopoly Large number of potential buyers but only a few sellers Very little difference between products Lots of barriers to entry

Oligopoly Example Computer Operating System Very few operating systems available to consumers Companies have a very large market share Windows: 90% Mac OS: 8% Linux: >2% Very little difference between the available operating systems Lots of information available (advertising and reviews) VERY difficult to enter into the OS industry Some control over prices

Monopoly Large number of buyers but only one seller There are no close substitutes for their goods or services Extremely hard to enter into market

Monopoly Example Pacific Gas and Electric (PG&E) The only electric utility provider in Stockton (and several other towns) They control 100% of the market There are (virtually) no substitutes for their product Some information available (advertising) It would be extremely difficult/expensive to try and enter the market They have complete control of their prices

PG&E in SF