1 Basic Market Concepts Shutdown Rule P > AC, making a  AVC < P < AC, SR loss, maybe OK P < AVC,shutdown. Profit Maximizing Quantity where MC = MR Market.

Slides:



Advertisements
Similar presentations
Market Structure and Competition
Advertisements

1 Chapter 11 Price Searcher Markets with High Entry Barriers.
Part 8 Monopolistic Competition and Oligopoly
MONOPOLISTIC COMPETITION, OLIGOPOLY, & GAME THEORY
Monopoly, Monopolistic Competition, and Oligopolies A Review.
Monopolistic Competition and Oligopoly
Oligopoly Fun and games. Oligopoly An oligopolist is one of a small number of producers in an industry. The industry is an oligopoly.  All oligopolists.
Monopolistic Competition. Market Structure Product Differentiation Product Differentiation Few Many Number of Firm Differentiation Product Differentiation.
Monopolistic Competition and Oligopoly
Chapter 12 Monopolistic Competition and Oligopoly.
Monopolistic Competition
MODELS OF MONOPOLY √ Barriers to Entry √ Profit Maximization and Output Choice √ Monopoly and Resource Allocation √ Monopoly and Product Quality √ Price.
Monopolistic Competition
Chapter 10 Monopolistic Competition and Oligopoly.
 relatively small economies of scale  many firms  product differentiation  close but not perfect substitutes  product characteristics, location, services.
Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets Copyright © 2014 McGraw-Hill Education. All rights reserved.
Market Dynamics and Pricing Entry and Exit in Perfect Competition and Monopoly; Monopsony; Price Discrimination; Monopolistic Competition.
Final presentation of Economic analysis for managers Presented to : Sir Dr. Khurram Mughal.
Perfect Competition, Monopoly, Oligopoly and Monopolistic Competition in Seller Markers Allan Fels, Professor of Government The Australia and New Zealand.
Competition And Market Structure
Economics: Principles and Applications, 2e by Robert E. Hall & Marc Lieberman.
Managerial Economics and Organizational Architecture, 5e Managerial Economics and Organizational Architecture, 5e Chapter 6: Market Structure Copyright.
1 Monopolistic Competition & Oligopoly ©2005 South-Western College Publishing Key Concepts Key Concepts Summary.
Chapter 6: Market Structure Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed.
Market Structure Dr.Deepakshi Gupta
CHAPTER 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies,
PERFECT COMPETITION Chpt 12. Overview market structure describes the state of a market with respect to competition.market The major market forms are:
Monopoly: This is a situation where a single producer (firm) is the sole producer of a good that has no close substitutes.
Competition in a Free Market Economy. What is Competition? Competition is the struggle between buyers and sellers to get the best products at the lowest.
Lecture 10 Markets with market power. Four idealized types of market structure Perfect competition: many sellers; they are selling an identical product.
Lecture 12Slide 1 Topics to be Discussed Oligopoly Price Competition Competition Versus Collusion: The Prisoners’ Dilemma.
CHAPTER 23 MONOPOLISTIC COMPETITION AND OLIGOPOLY.
Today n Oligopoly Theory n Economic Experiment in Class.
Online Resources Monopoly Quiz (with answers) Practice FRQs Unit 3 and 4 Powerpoints 1.
Monopolistic Competition & Oligopoly. Characteristics of Monopolistic Competition A relatively large number of sellers (Small Market Share, No Collusion,
Monopolistic competition and Oligopoly
CHAPTER 15 Oligopoly PowerPoint® Slides by Can Erbil © 2004 Worth Publishers, all rights reserved.
Name the market structure(s) that it is associated with each concept
C opyright  2007 by Oxford University Press, Inc. PowerPoint Slides Prepared by Robert F. Brooker, Ph.D.Slide 1.
Perfect Competition Principles of Microeconomics Boris Nikolaev.
PowerPoint Slides by Robert F. BrookerHarcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Managerial Economics in a Global Economy.
1 Part 5 ___________________________________________________________________________ ___________________________________________________________________________.
© The McGraw-Hill Companies, 2008 Chapter 9 Market structure and imperfect competition David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 9th.
Micro Review Day 3 and 4. Perfect Competition 14 A Perfectly Competitive Market For a market to be perfectly competitive, six conditions must be met:
Monopolistic Competition & Oligopoly. Unit Objectives Describe the characteristics of monopolistic competition and oligopoly Discover how monopolistic.
Monopolistic Competition & Oligopoly
Chapter 9 Oligopoly and Firm Architecture
Oligopoly and Monopolistic Competition
FOUR MARKET MODELS.
Chapter 9 Oligopoly and Firm Architecture
Forms of Markets.
Monopolistic Competition And Oligopoly
Chapter 10 Monopolistic Competition and Oligopoly
Managerial Economics in a Global Economy
Monopolistic Competition and Oligopoly
Today Oligopoly Theory Economic Experiment in Class.
Monopolistic Competition
BEC 30325: MANAGERIAL ECONOMICS
Monopoly Quiz (with answers) Practice FRQs Unit 3 and 4 Powerpoints
Pure Competition.
McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Monopolistic Competition and Oligopoly
BEC 30325: MANAGERIAL ECONOMICS
BEC 30325: MANAGERIAL ECONOMICS
Less competition Perfect Competition Monopolistic Competition
BEC 30325: MANAGERIAL ECONOMICS
BEC 30325: MANAGERIAL ECONOMICS
Microeconomics ECON 2302 Spring 2011
Competition brings out the best in products and the worst in people.
Presentation transcript:

1 Basic Market Concepts Shutdown Rule P > AC, making a  AVC < P < AC, SR loss, maybe OK P < AVC,shutdown. Profit Maximizing Quantity where MC = MR Market Power ability to set the market price HH Index (Sum of squares of Market Share)

2 Factors that determine Market Structure Number of Buyers and Sellers Barriers to Entry / Exit Regulation (patent etc.) Sole Ownership Scale Economies (Natural Monopolies) Are the Products Homogenous / Differentiated

3 4 Market Structures PCMCOM AgentsMany FewOne BarriersNone Yes ProductHomogenousDifferentiatedEither --

4 Characteristics of the 4 Market Structures TYPEDESCRIPTIONPRICE Perfect Competition Many, Mobility, Free Entry LR Econ Profit =0 P = LAC = MC MonopolyMarket suppiled by 1 Firm Barriers to entry exist. P set by Q* at MR = MC Monopolistic Competition Firms compete to create little niche markets P set by Q* at MR = MC OligopolyFew sellers. Cournot (Q-fix) Bertrand (P-fix) Strategic interaction

5 Oligopoly: Strategic Behavior Barriers to entry that can lead to oligopoly. The prisoner’s dilemma model. Game theory analyzes behavior of oligopolists. Equilibrium may differ in games with repeated plays played only once. Explicit and implicit collusion. Why and when cheating is likely in a cartel. Forces operating to restrict and reduce the extent of oligopoly in the economy.

6 A Summary of Market Structures