Sources of Market Power

Slides:

Advertisements

Similar presentations

Monopolistic Competition

Advertisements

Ch. 7. The factors that make it difficult to enter a market will determine the type of market structure Start-Up Costs- Technology-

Economics: Reading Quiz #3 : 10 points

MARKET “A market is an area over which buyers and sellers negotiate for the exchange of a well defined commodity”

Monopolistic Competition. Market Structure Product Differentiation Product Differentiation Few Many Number of Firm Differentiation Product Differentiation.

Economists assume that there are a number of different buyers and sellers in the marketplace. For almost every product there are substitutes, so if one.

Chapter 9 – Profit maximization

Monopolistic Competiton. Assumptions Many sellers and many buyers Slightly different products Easy entry and exit (low barriers)

Market Structures. Monopoly  Single seller of a product dominates market  “price makers”/”price setters”  Barriers to entry high  Most newspapers,

Eco 101 Principles of Microeconomics Consumer Choice Production & Costs Market Structures Resource Markets

Monopolistic Competition and Oligopoly

Market Structure The concept of market structure simply relates to how much market power or control a particular firm has in affecting the level of market.

Market Dynamics and Pricing Entry and Exit in Perfect Competition and Monopoly; Monopsony; Price Discrimination; Monopolistic Competition.

4 Market Structures Candy Markets Simulation.

Marketing Market type.

Monopolistic Competition

Market Structures The number of companies producing identical products.

Chapter 6: Market Structure Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed.

Unit 2 Lesson 4 Market Structures Part 2. Re-Cap - Market Structures Perfect C - identical products, many buyers/sellers, P-taker Monopolistic C - like.

Microeconomics Unit III: The Theory of the Firm. The selling environment in which a firm produces and sells its product is called the market structure.

Market Structure Dr.Deepakshi Gupta

Market Structures The different types of markets and the way in which businesses compete.

Price Discrimination Price discrimination exist when sales of identical goods or services are transacted at different prices from the same provider Example.

PERFECT COMPETITION Chpt 12. Overview market structure describes the state of a market with respect to competition.market The major market forms are:

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.

Perfect Competition. A market structure in which a large number of firms all produce the same product A market structure in which a large number of firms.

Managerial Economics in a Global Economy, 5th Edition by Dominick Salvatore Chapter 8 Market Structure: Perfect Competition, Monopoly and Monopolistic.

Imperfectly Competitive Markets Monopolistic Competition Oligopoly.

Types of Economic Competition. Determining the Type of Economic Competition The number of firms competing in the market The amount of similarity between.

Perfect Competition Econ 100 Lecture 5.1 Perfect Competition

1.How do you face competition in your daily life? 2.How does competition apply to economics in a positive and a negative way? 1.How do you face competition.

Types of Competition Chapter 7. Perfect Competition Many sellers – Similar Products – dry cleaners – agriculture Easy entry No control over price –

Topic 1Topic 2Topic 3Topic 4Topic

CH. 9: MARKET STRUCTURE 1. How much COMPETITION is in a MARKET. 2. CRITERIA A. Market Size A. Market Size B. Product Type B. Product Type C. Entry/Exit.

Econ 201 Chpt 14: Perfect Competition 1. Overview of Market Structures Quick Reference to Basic Market Structures Market StructureSeller Entry BarriersSeller.

Economics Learning Steps 1/27&28/15. The Law of Demand And The Law Supply Test.

Economics Learning Steps 9/28/10. Standards & Elements SSEMI4 The student will explain the organization and role of business and analyze the four types.

Perfect Competition Principles of Microeconomics Boris Nikolaev.

1 Part 5 ___________________________________________________________________________ ___________________________________________________________________________.

Market Structures. Definition Nature and degree of competition among firms operating in the same industry Nature and degree of competition among firms.

Economics 1.What are your feelings about a minimum wage? What is a price ceiling? 2.When you are buying fruit and vegetables at the grocery store, what.

Four Market Structures The focus of this lecture is the four market structures. Students will learn the characteristics of pure competition, pure monopoly,

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

Market Structure Characteristics of the Market Organizational Competitive Features that best describe goods or services market.

Four Market Structures

Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly

Models of Competition Part II:

How do Supply & Demand Get Together to Make Markets?

Types of Economic Competition

Market Structures Lesson 10 Module 57.

1 PowerPoint Slides Prepared by Robert F. Brooker, Ph.D. Slide 1.

Monopolistic Competition

BEC 30325: MANAGERIAL ECONOMICS

Perfect Competition A2 Economics.

Chapter 8 Market Structure: Perfect Competition, Monopoly , Oligopoly and Monopolistic Competition PowerPoint Slides by Robert F. Brooker Harcourt, Inc.

Business Organizations and Competition

BEC 30325: MANAGERIAL ECONOMICS

Competition and Market Structure

Business Organizations & Market Structures

BEC 30325: MANAGERIAL ECONOMICS

Prepared by Robert F. Brooker, Ph.D. Copyright ©2004 by South-Western, a division of Thomson Learning. All rights reserved.Slide 1 Market Structure Perfect.

Features and Appraisal of New Economic Policy

7-1: What is Perfect Competition?

BEC 30325: MANAGERIAL ECONOMICS

Perfect Competition Market where there are numerous buyers and sellers

Market Structures Pure Monopoly Perfect Competition

Characteristics of Market Structures

Bellwork 1. Incomes increase. In a graph of the market for bus rides (an inferior good) we would expect: a. The demand curve to shift to the left b. The.

Econ 100 Lecture 4.2 Perfect Competition.

Perfect Competition Econ 100 Lecture 5.4 Perfect Competition

Presentation transcript:

Sources of Market Power What if products are not standardized? What if there are few sellers or buyers? What if there are high barriers to entry or exit?

What happens when we violate these assumptions… Assumptions that Underlie Perfect Competition Firms sell standardized products (commodities). 2. Firms are all price takers: no one firm’s actions can “move the market.” 3. There is free entry and exit of firms with perfectly mobile factors of production (capital and labor) in the long run. 4. Firms and consumers have perfect information. What happens when we violate these assumptions…

What if Products are NOT Standardized? Experience Goods: Consumers do not know the utility until AFTER consumption. Credence Goods: Consumers do not know the utility EVER – even after consumption.

What if Products are NOT Excludable and/or Rival (Subtractable)? Rival, non-excludable From: Elinor Ostrom (2010) “Beyond Markets and States:Polycentric Governance of Complex Economic Systems” Elinor Ostrom American Economic Review 100(3): 641 - 672

Natural Monopolies What if there are BIG economies of scale? Large economies of scale are in effect high barriers to entry – tough to enter as a small competitor Natural Monopolies

Monopsony What if there are FEW customers? Not going to deal a lot with monposony

What if there are BARRIERS to ENTRY or EXIT? Location (retail – if you have key locations, that creates a barrier to competitors) Patents Talent! Work place environment – best places to work Network externalities Regulation

Standardized Product, Low Barriers → Perfect Competition Standardized Product, High Barriers → Monopoly, Oligopoly Diversified Product, Low Barriers → Monopolistic Competition Diversified Product, High Barriers → Monopoly, Oligopoly

Everywhere! Products Products Find products that are SIMILAR to yours in type of goods/services. Classify your group of products (commodity, credence, experience, common pool, other?) Describe the market for the products – what is the elasticity of demand? Who has more power, producers or consumers?