Market Structures
Perfectly Competitive
A perfectly competitive market is a hypothetical market where competition is at its greatest possible level. Some economists argue that perfect competition would produce the best possible outcomes for consumers, and society.
For there to be perfect compitition
1. All firms sell an identical product.
2. All firms are price-takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit.
Indian Fish industry
An Indian fish market might be an example of something close to this (though real "perfect competition" doesn't really exist.) At the fist market, lots of sellers gather together to try to sell the same products, and lots of customers try to buy them with a good knowledge of what they are buying. There is little to prevent someone from joining in on the selling or quitting the market altogether.
Indian Fish industry
PRODUCTS OFFERED - FISH (for eating)
POSSESSES THE CHARACTERISTICS BECAUSE -
1. All firms sell an identical product (fish).
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit.
PERSON WHO OPERATES HERE- A fisherman
MONOPOLY
the seller faces no competition, as they are the sole seller of goods with no close substitute.
First, it must be a single seller in the market.
Secondly, there must be no close substitutes for the product or there must be some other economic barrier that prevents users from using substitutes
Thirdly, there must be significant barriers to entry so that no competitors can enter the market.
Another characteristic of monopolies is that they do not need to advertise their product to increase market share. They generally use public relations and advertising to increase awareness of their products and to maintain a good relationship with their buyers.
CHARACTERISTICS
INDIAN CABLE COMPANY
The cable company in India, facing no competition, is notorious for poor quality and poor service.
INDIAN CABLE COMPANY
GOODS / SERVICES - Provide TV channels and stations for entertainment and information to the population in India.
POSSESSES IN THE MARKET STRUCTURE- there is “little or no competition” or where “barriers to entry are erected by incumbent service providers”. These monopolies may have serious implications for the terms of competition, pricing, quality of service, and healthy growth of the cable TV sector.
EXAMPLE OF FIRMS THAT OPERATE WITHIN- (state-owned Arasu Cable TV), Punjab (Fastway Transmission), Orissa (Ortel), and Kerala (Asianet Satellite Communications).
monopolistic competition
CHARACTERISTICS
1. All firms produce similar yet not perfectly substitutable products.
2. All firms are able to enter the industry if the profits are attractive.
3. All firms are profit maximizers.
4. All firms have some market power, which means none are price takers.
Hairdressers
Hairdressers each sell a slightly differentiated product. Each one will have a slightly different skill set and also have different premises, in a different location. All of these things go towards making the product differentiated to you.
Hairdressers
PRODUCTS - hair cuts, hair care, etc.
POSSESSES - There are lots of them. It isn't an industry where there are big chains. This keeps it away from a oligopolistic market structure. Each individual hairdresser will have a downward slowing demand curve: raising their price is likely to lose some of their customers, but not in all .
Example - Aleah's II, Barbara West Hair Salon
oligopoly
oligopoly
A situation in which a particular market is controlled by a small group of firms. An oligopoly is much like a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market.
oligopoly
1- The most important characteristic of oligopoly is an industry dominated by a small number of large firms, each of which is relatively large compared to the overall size of the market.
2- Identical or Differentiate Products
Some oligopolistic industries produce identical products, like perfect competition in this regard, while others produce differentiated products, more like monopolistic competition.
3- Firms in an oligopolistic industry attain and retain market control throughbarriers to entry. The most noted entry barriers are: (1) exclusive resource ownership, (2) patents and copyrights, (3) other government restrictions, and (4) high start-up cost.
Four breakfast cereal manufacturers - Kellogg, General Mills, Post and Quaker
- They are less concentrated than in a monopoly, but more concentrated than in a competitive system.
- The businesses offer an identical product or services. (cereal)
Four breakfast cereal manufacturers - Kellogg, General Mills, Post and Quaker
PRODUCTS- Cereal!
-
a breakfast food made from roasted grain, typically eaten with milk.
"a bowl of cereal"
POSSESSES - All described before, and it established exclusive dealerships, has agreements to get lower prices from suppliers, and lower prices with the intention of keeping new companies out.
OPERATES - Kellogg, General Mills, Post, Quaker
END
ewcon
By corys
ewcon
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