1. FOUR TYPES OF MARKET STRUCTURES
UNIT 2

2. FOUR TYPES OF MARKET STRUCTURES
MOST COMPETITIVE
LEAST COMPETITIVE
PERFECT COMPETITION
MONOPOLISTIC COMPETITION
OLIGOPOLY
MONOPOLY
HOW EASY IS IT FOR SELLERS TO ENTER MARKET?
Sellers enter & exit EASILY, lower start up costs
FEW BARRIERS TO ENTRY
DIFFICULT TO ENTER, higher start up costs
VERY DIFFICULT TO ENTER MARKET, high start up costs
WHAT TYPE OF PRODUCTS ARE SOLD?
IDENTICAL PRODUCTS
SIMILAR BUT NOT IDENTICAL
MUST DIFFERENTIATE BUILD BRAND LOYALTY
SIMILAR OR IDENTICAL
ONE MAJOR PRODUCT, NO VARIETY or SUBSTITUTES
HOW MUCH CONTROL DO SELLERS HAVE OVER PRICES?
NONE results in LOWER PRICES FOR BUYERS who are WELL INFORMED,
SUPPLY & DEMAND DETERMINE PRICE
SOME/ SLIGHT CONTROL BUT COMPETITION DRIVES PRICES WHICH VARY DUE TO DIFFERENTIATION (STORE, DESIGN, QUALITY)
MORE CONTROL AS ONE LEADER SETS PRICE, INTERDEP-ENDENCE,
PRICE LEADERSHIP
PRICE WARS, COLLUSION
TOTAL CONTROL BY SELLER
MEANS HIGHER PRICES FOR BUYER
# HOW MANY SELLERS ARE COMPETING IN THE MARKET?
LARGE # OF
SELLERS & BUYERS
MANY BUYERS AND SELLERS
FEW LARGE SELLERS DOMINATE MARKET
3-4 LGST PRODUCE 70-80%
ONE SINGLE SELLER
GIVE EXAMPLES
agricultural (peaches, apples)
JEANS (GAP VS ABERCROMBIE), SOFT DRINKS, COMPUTER GAMES
CELL PHONES, AIRLINES, AUTOS, CEREAL
PUBLIC UTILITIES (WATER, SEWER)