Market structures Flashcards
what are the characteristics of market structures?
the number of buyers
the number and size of firms
the type of product in the market (homogenous or differentiated)
the type of barriers to entry and exit
the degree of competition between the firms in the market
what can the market structures be separated into?
perfect competition - a market structure where individual firms have no market power due to the amount of competition and are unable to influence the price
imperfect competition- Market structure where firms do have some sort of market power and can influence prices.
what markets does imperfect competition include?
monopolistic
oligopoly
monopoly
what is a monopolistic Market structure?
a market structure where there are many firms offering a similar product but with product differentiation
e.g. nail salons
what is an oligopoly Market structure?
a market structure in which a few large firms dominate the industry, with each firm having significant Market power
what is a monopoly market structure?
a Market structure in which there is a single supplier of a particular product and has the power to influence the market supply and price.
what are the signs of market failure?
the ability of suppliers to have control price
the ability of suppliers to restrict output in a market so as to raise prices
a lack of allocative efficiency
a lack of productive efficiency
what does it mean when a firm is closer to being a monopoly?
The higher the concentration ratio , market share and market power
competition is greatly diminished and the benefits of competition are likely to be lost
what does it mean when a firm is closer to being perfectly competitive ?
the lower the concentration ratio , market share and market power
competition is enhanced and the significant benefits or competition are likely gained
what is meant by competitive markets?
no single firm has substantial Market power , and prices and outputs are determined by the forces of supply and demand
what is meant by limited competition?
where firms have significant Markey power , market outcomes can deviate from the ideal of perfect competition
