1. Types of Competition Chapter 7

3. Perfect Competition Many sellers – Similar Products – dry cleaners – agriculture Easy entry No control over price – – market is controlled by supply and demand

4. Monopolistic Competition Large number of sellers- Similar but slightly different products – toothpaste, clothing, cosmetics Relatively Easy Entry some control over price – can raise prices without loss of customers Non-price competition – product differences – advertising

5. Oligopoly An industry dominated by a few suppliers that exercise some control over price. – Automobile industry – U.S. big three – cereal companies Substantial barriers to entry – customer loyalty – excessive capital Non – price competition Identical or slightly different products Limited control over price- – any company can raise or lower its price but the other competitors react.

6. Monopoly Single seller No Substitutes Complete Control of the Market Price by controlling supply No entry for competition U.S. tries to prevent

7. Natural Monopoly Due to high costs it is cost efficient to have only one provider Utilities- gas, electricity etc.