The Competitive Market BMI3C

Free Market An economy that allows: Profit Private Property Competition

Profit Money left over from sales after paying off all expenses and taxes In a free market you are allowed to earn and keep a profit

Private Property Private citizens and corporations can own property (land, equipment, etc.) Individuals can use or dispose of things of value, as long as no laws are broken

Competition You are free to go into any business you like (as long as it’s legal) Competition drives prices down and fuels innovation

Canada Is Canada a “pure” free market? Gov’t regulation (ex: minimum wage) Gov’t monopolies (ex: VIA rail, Healthcare, etc) Gov’t guides certain industries (subsidies for farming, oil & gas, etc.) Canada is technically a “mixed economy”, like most nations. Free Market Economy Command Economy Sweden North Korea USA

Competition Competition defines the structure of the market The competitive market permits and encourages variety Consumers have a choice of product styles, product types, price, and quality There are 4 major market structures: Perfect Competition Monopolistic Competition Monopoly Oligopoly

Perfect Competition large number of small companies no one company has control over the market government legislation is required to restrict growth in order to avoid/prevent dominance by one company

Monopolistic Competition consists of a large number of small firms each has small opportunity for control

Oligopoly a small number of firms each has a great opportunity for control

Monopoly a single company has complete market control

What are some examples of industries that have… Perfect Competition Monopolistic Competition Oligopoly Monopoly

Discussion Is Microsoft a monopoly?

Canada Canada regulates competition by not allowing: monopolies price – fixing restrictive mergers exclusive dealing

Competition What are some of the ways that businesses compete? Price (leads to R&D) Service Placement Brand

MARKETING Competition

Direct vs. Indirect Competition Direct Competition is where products or services which perform the same function compete against each other.

More Direct Competition Walmart and Target Cineplex and Empire Theatres McDonalds and Wendys

Direct vs. Indirect Competition Indirect Compeition (or Substitute products) where products which are close substitutes for one another compete