Monopolistic Competition Many firms compete in a market to sell products that are similar but not identical. Four conditions of Monopolistic Competition: Many firms Few barriers to entry Small control over price Different products

Non-Price Competition Defined as a way to attract customers through style, service, or location, but not a lower price. Physical characteristics - simplest way to distinguish your products Location Service level Advertising/Image

Examples of Monopolistic Competition Retail stores restaurants Gas stations

Oligopoly Term is derived from two Greek terms: “oligi “= few “polien” = sellers Defined as a market structure dominated by a few large firms selling similar or different products.

Features of Oligopoly Few firms each firm controls a large portion of the market severe competition Interdependence Actions of one may affect rival firms Non-price competition advertising and service 4) Barriers to Entry high due to government regulations (licenses/patents) high start-up costs

Best Examples of Oligopolies Operating systems: Apple and Microsoft Soft drink companies: Coke and Pepsi National mass media: NBC, CBS, ABC Airline Industry: Boeing and Airbus

Monopoly Defined as a market dominated by a single seller. A firm is considered a monopoly if………… The sole seller of a product Its product does not have close substitutes

Monopoly What cause monopolies to exist?????? Fundamental problem is barriers to entry Barriers to entry have three sources: Ownership of a key resource Government gives a single firm the exclusive rights to production Costs of production make a single producer more efficient

Natural Monopolies Market that runs most efficiently when one large firm provides all of the output. High barriers to entry Government allows the monopoly to form and then regulates it Examples……. Public Utilities (water, electricity, natural gas)

Government Monopolies Government allows or creates a monopoly within a market. How??????? By issuing patents, franchises and licensing agreements. Patent: license that gives an inventor the exclusive right to sell a product for a certain period of time (Ex: pharmaceutical industry) Franchise: right to sell a good or service within a exclusive market (Ex: pro sports teams) License: government issued right to operate a business (Ex: radio stations)