2. Ch. 7: A Spectrum of Markets GR. 11 ECONOMICS (CIE3M1) M. Nicholson

3. Perfect Competition Many sellers of identical product Easy to enter the industry No control over price and no advertising Examples – stock market, agriculture

4. Monopoly One seller and no substitutes Very difficult or impossible to enter the industry Price-maker  much control over price Advertise to improve image Examples  water, urban transit, cable

5. Oligopoly Homogeneous: some product distinction Differentiated: much product distinction Few sellers and difficult to enter Some control over price Much advertising for differentiated Automobiles, beer differentiated Steel, cement homogeneous

6. Monopolistic Competition Many sellers with some product distinction Easy to enter the industry, but a little control over price Lots of advertising Examples  Fast food, clothing

7. Concentration In Canadian Industry Concentration ratio measures the proportion of industry’s sales by top 4 and top 8 Tobacco, oil and transportation equipment have little competition

8. Restricting Competition Unfair competition Establishing a cartel Interlocking directorates Mergers Establishing a holding company Horizontal, vertical, conglomerate

9. Advantages Of Large-Scale Operations Money available for research to develop new and better products and more efficient, cheaper production methods Large quantity production allows for specialized machinery (capital) and labour (human) that increases efficiency and lowers cost (e.g. automobiles)

10. Government Regulation Government Ownership – natural monopolies Laws to promote competition Regulation of prices and services