characteristics of market structure Flashcards
refers to the competitive
environment in which
buyers and sellers operate.
market structure
2 kinds of price competition
price competition
non-price competition
sellers compete among each other by setting a lower price.
Price competition
sellers compete in areas like product quality, advertising,
packaging, and service other than price.
Non-price competition
market structure are divided into two markets
perfect market or perfect competition
imperfect competition
is where there are homogenous products, free entry and exit from market of a firm, perfect knowledge of market condition, and perfect mobility of factors of production.
Perfect Competition
is where perfect competition is not in existence. Number of buyers and sellers are small. No perfect knowledge of market conditions. There is no single price in this market.
Imperfect competition
is an individual, group or company that has a full control of all the price, product, and no close substitute for good or service
Monopoly
an industry in which economies of scale are so important that only one firm can survive. Ex. Gas Companies (raw)
Natural monopoly
no other business chooses to compete in that area.
i. Ex. small town drugstore
Geographic monopoly
results from new discoveries and inventions. Government grants these monopolies through the issue of patents and copyrights. i. Ex. Patents - inventions – Windows XP, Copyrights published
Technological monopoly
involves products people.
i. Ex. LTO, PRC, PSA, Railways, Post and Telegraph
Government monopoly
an industry in which many firms offer products or services that are similar, but not perfect substitutes.
Monopolistic Competition
is quite like monopoly but a market dominated by a few firms.
oligopoly
