Market Structures

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Market Structures: 

Market Structures Amount and Degree of Competition among Firms Competing in the same Industry ©2012, TESCCC Economics Unit 4, Lesson 2

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Industry All the sellers of the same or similar product Example: Automobile industry ©2012, TESCCC

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Market The buyers The sellers The product The price ©2012, TESCCC

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Market Structure Identifies the amount of competition in an industry If we can identify the amount of competition in an industry, we’ll be able to say something about. Pricing Price competition ©2012, TESCCC

Perfect Competition: 

Perfect Competition Model does not exist Infinite number of sellers Consumers have access to all information. Sellers have no control over prices. I dentical products Buyer does not prefer one item over the other. Most competitive ©2012, TESCCC

Imperfect Competition: 

Imperfect Competition Three types of imperfect competition ©2012, TESCCC

Monopolistic Competition: 

Monopolistic Competition All conditions of perfect competition with product differentiation Non-price competition Most competitive of imperfect competition Most companies operate here ©2012, TESCCC

Oligopoly: 

Oligopoly Few, large firms dominate the market (70-80% of the market concentration). Not as much competition- Firms have some control over prices. Price leadership Collusion Price fixing ©2012, TESCCC

Monopoly: 

Monopoly One seller No competition Legal types Natural Technological- Patent or copyright Governmental ©2012, TESCCC

Monopolies: 

Monopolies Natural It would be inefficient for more than one seller to operate. ©2012, TESCCC

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Monopolies Technology Patent, copyright ©2012, TESCCC

Monopolies: 

Monopolies Governmental Government owned and controlled Example: US Postal Service ©2012, TESCCC

Monopolies: 

Monopolies Franchises or licenses Cable companies Radio, TV, cell phones, broadband Industrial organizations NFL, NBA, etc. ©2012, TESCCC

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Perfect Competition Monopolistic Competition Oligopoly Monopoly Continuum of Market Structures – Shows degrees of competition from most competition to least competition. Most Least ©2012, TESCCC

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Price Discrimination Divide consumers into groups. Charge different prices to different sections of consumers. Examples? Movie theatre Senior citizen discounts Cleaners Airline tickets ©2012, TESCCC