Competitions and Market Structures Market structures include perfect competition, monopolistic competition, monopoly and oligopoly
Monopolistic competition
product differentiation
"Real or imagined differences between competing products in the same industry"
Nonprice competition
Use of advertising, giveaways, or other promotional campaigns to convince buyers that the product is somehow better than another brand
Oligopoly
Is a market structure in which a few very large sellers dominate the industry
Pricing behavior
Tendency of oligopolist to work together
Inderdependent behavior
Collusion
Formal agreement to set prices
Price-fixing
Cooperative manner
Main topic
Perfect Competition
Necessary condition
"Buyers and sellers deal in identical products"
"each buyer and seller act independently"
"Buyers and sellers are free to enter into, conduct, or get out of bussiness"
"Buyers and sellers are reasonably well-informed about products and prices"
"No single buyer or seller is large enough or powerfull enough to affect the price"
A theoretical situation
"Many sellers offer nearly identical products"
Monopoly
Types
Natural
Market situation where the costs pf production are minimized
Economics of scale
Situation in which the average cost of production falls as the firm gets larger
Geographic
Based on the absence of other sellers in certain geographic area
Technologic
Based on owenership or control of a manufacturing method, process, or other scientific advance.
Government
monopoly the governmet owns and operates