1. Market Structures Economics Unit 4, Lesson 2
Amount and Degree of Competition among Firms Competing in the same Industry
Photo credit (all):
Microsoft. (Designer). (2010). Clip art [Web Graphic]. Retrieved from
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2. Industry All the sellers of the same or similar product
Example: Automobile industry
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3. Market
The buyers
The sellers
The product
The price
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4. Market Structure Identifies the amount of competition in an industry
If we can identify the amount of competition in an industry, we’ll be able to say something about:
Pricing
Price competition
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5. Perfect Competition Model does not exist Infinite number of sellers
Consumers have access to all information.
Sellers have no control over prices.
Identical products
Buyer does not prefer one item over the other
Most competitive
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6. Imperfect Competition
Three types of imperfect competition
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7. Monopolistic Competition
All conditions of perfect competition with product differentiation
Non-price competition
Most competitive of imperfect competition
Most companies operate here
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8. Oligopoly
Few, large firms dominate the market (70-80% of the market concentration).
Not as much competition- Firms have some control over prices.
Price leadership
Collusion
Price fixing
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9. Monopoly One seller No competition Legal types Natural
Technological – Patent or copyright
Governmental
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10. Monopolies
Natural
It would be inefficient for more than one seller to operate.
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11. Monopolies
Technology
Patent, copyright
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12. Monopolies Governmental Government owned and controlled
Example: US Postal Service
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13. Monopolies Franchises or licenses Industrial organizations
Cable companies
Radio, TV, cell phones, broadband
Industrial organizations
NFL, NBA, etc.
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14. Monopolistic Perfect Competition Competition Oligopoly Monopoly Most
Least
Continuum of Market Structures – Shows degrees of competition from most competition to least competition.
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15. Price Discrimination Divide consumers into groups.
Charge different prices to different sections of consumers.
Examples?
Movie theatre
Senior citizen discounts
Cleaners
Airline tickets
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