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Appeco Lecture 7

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Isabella Ege
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38 views

Appeco Lecture 7

Uploaded by

Isabella Ege
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Market

Structures
Lecture 7
M R
A C
ST

RK T
Refers to the

U
ET R
competitive
environment in

U
which buyers and
sellers operate.

ES
CO
M
PE
Rivalry among

TI
various sellers in

TI
the market

O
N
M
A
RK
Situation of diffused,

E
impersonal competition

T
among sellers who compete
to sell their goods and among
buyers who use their
purchasing power to acquire
the goods in the market.
FACTORS THAT AFFECT THE DEGREE OF COMPETI
TION IN THE MARKET:
Number and size of buyers and sellers in
the market

Similarity or type of Entry and exit of firms


product bought and and input owners
sold

Degree of mobility of Degree of knowledge of


resources economic agents regarding
prices, costs, demand and
supply conditions
TYPES OF MARKET
STRUCTURES
1
PERFECT
COMPETITION
-Implies an ideal situation in the market
-Buyers and sellers have negligible impact
on market price
-Homogenous products are sold by sellers
which means that products are highly
similar and consumers have no preference
in buying from one seller to another
-Perfect mobility of resources
-Perfect knowledge of economic agents
such as prices, costs and economic
opportunities
2
IMPERFECT
COMPETITION
-If one or more assumptions of perfect
competition will not be met, market
becomes imperfectly competitive
TYPES OF IMPERFECT COMPETITION
A. MONOPOLY

-Single firm in the market has control of entire supply of raw


materials
-Product has no close substitute
-Ownership of patent or copyright is invested in a single seller
-The producer enjoys economy of scale which means savings
from a large range of output
-Grant of a government franchise to a single firm
-High barrier to entry and exit
TYPES OF IMPERFECT COMPETITION
B. MONOPOLISTIC COMPETITION

-A blend of perfect competition and monopoly


-Products are differentiated (highly substitutable products but
not perfect substitute)
-Easy entry and exit of sellers in the market
-Firms can determine characteristics of products and has
some control over price and quantity
TYPES OF IMPERFECT COMPETITION
C. OLIGOPOLY

-Few sellers
-There is barrier to free entry and exit
-The action of each firm affects other firms
-There is interdependence among firms
-Firms try to raise prices by colluding with each other
THANK YOU
MS. MERIDA

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