Objective: Analyze the characteristics of the 3 types of competition

I. What is Competition? A. Competition: struggle between various producers to win the largest part of a market 1. Ex: Coke v. Pepsi – both want to sell the most of their product

B. Monopoly: - all market share and influence is controlled by one firm – Absence of Competition 1. Ex: NFL – the NFL is the only outlet by which football teams can compete professionally with other teams

C. Why is Competition Important? 1. Lower Prices 2. Improves quality of goods 3. Improves the efficiency of the market 4. Innovation

II. Types of Competition A. Monopolistic Competition: all competitive firms have similar market share yet offer slightly differentiated products at varying prices 1. Ex: Cereal Companies – there are many different types of cereals and brands that all make essentially the same product; however, some brands charge way above the true market price

B. Oligopolistic Competition: only a few number of firms have market share and thus control and dominate products and prices 1. Ex: T-Mobile, Sprint, AT&T, and Verizon make up 89% of total cellular market share

C. Perfect (Pure) Competition: all competitive firms have the same market share and influence and offer the same product with little to no control over prices 1. Ex: Farmers Market – there’s really no difference between goods sold at the market, and it all costs around the same amount