0 valutazioniIl 0% ha trovato utile questo documento (0 voti)
685 visualizzazioni72 pagine
GOALS[?] Understand the four market structures 1. Perfectly competitive market 2. Monopoly 3. Oligopoly 4. Monopolistic Competition Be aware of the PRICING and OUTPUT decisions of firms operating in each structure. Market STRUCTURE identifies how a market is made up in terms of: +The number of firms in the industry +The nature of the product produced +The degree of monopoly power each firm has.
GOALS[?] Understand the four market structures 1. Perfectly competitive market 2. Monopoly 3. Oligopoly 4. Monopolistic Competition Be aware of the PRICING and OUTPUT decisions of firms operating in each structure. Market STRUCTURE identifies how a market is made up in terms of: +The number of firms in the industry +The nature of the product produced +The degree of monopoly power each firm has.
Copyright:
Attribution Non-Commercial (BY-NC)
Formati disponibili
Scarica in formato PPT, PDF, TXT o leggi online su Scribd
GOALS[?] Understand the four market structures 1. Perfectly competitive market 2. Monopoly 3. Oligopoly 4. Monopolistic Competition Be aware of the PRICING and OUTPUT decisions of firms operating in each structure. Market STRUCTURE identifies how a market is made up in terms of: +The number of firms in the industry +The nature of the product produced +The degree of monopoly power each firm has.
Copyright:
Attribution Non-Commercial (BY-NC)
Formati disponibili
Scarica in formato PPT, PDF, TXT o leggi online su Scribd
1. Perfectly competitive market 2. Monopoly 3. Oligopoly 4. Monopolistic Competition Be aware of the pricing and output decisions of firms operating in each structure MARKET STRUCTURE BUSINESS ENVIRONMENT in which the firm operates, the characteristics of which influence the PRICING and OUTPUT decisions of the firm. Market Structure Characteristics of each model: Number and size of firms that make up the industry Control over price or output Freedom of entry and exit from the industry Nature of the product degree of homogeneity (similarity) of the products in the industry (extent to which products can be regarded as substitutes for each other) Diagrammatic representation the shape of the demand curve, etc. Market Structure Market structure identifies how a market is made up in terms of: The number of firms in the industry The nature of the product produced The degree of monopoly power each firm has The degree to which the firm can influence price Profit levels Firms behaviour pricing strategies, non-price competition, output levels The extent of barriers to entry The impact on efficiency Market Structure Characteristics: Look at these everyday products what type of market structure are the producers of these products operating in? Remember to think about the nature of the product, entry and exit, behaviour of the firms, number and size of the firms in the industry. You might even have to ask what the industry is?? Canon SLR Camera Bananas Mercedes CLK Coupe Vodka Electric Guitar Jazz Body Is a group of buyers and sellers of particular good or service. What is a Market? A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services for money is a transaction. Market participants consist of all the buyers and sellers of a good who influence its price. There are two roles in markets, buyers and sellers. The market facilitates trade and enables the distribution and allocation of resources in a society. 4 Major Market Structures: Monopoly Oligopoly Monopolistic Competition Pure or Perfect Competition PERFECT VS IMPERFECT MARKETS 1. Perfectly Competitive Market 1. Monopoly 2. Oligopoly 3. Monopolistic Competition PERFECT COMPETITION IMPERFECT COMPETITION LINE OF COMPETITION Zero Competition More competition Monopoly Oligopoly Monopolistically competitive Market Perfect Competitive Market KINDS OF COMPETITION Competition Is a process of seeking or struggling for a common thing or position. Example: Mcdo vs. Jollibee, Coke vs. Pepsi, etc. There are two kinds of Competition: Healthy and Unhealthy. It will be determined by the process, tactics or strategies used in achieving the goal or objective. Competition in Business Advantages - It leads to the improvement of the product for sale. - Competition keeps price low. - The presence of other firms may lead to an introduction of new products and services. Unhealthy Competition When positive, legal and clean procedures, ways or strategies are used in attaining a goal where this would lead to the total development of all the aspects of an individual. Healthy Competition Using dirty tactics, illegal means and negative processes are used to win like corrupting other people, resorting to violence, etc. This can lead to destruction and mayhem. Perfect Competition This is an ideal market structure because it possesses the many conditions or assumptions that should be seen in a perfect competitive market like the following: - Many buyers and sellers - Selling of similar/ homogeneous products - Full knowledge among buyers and sellers about the market conditions - Mobility among the factors of production - Freedom for the producers to enter or leave the country Imperfect Competition It is easier to find pure competition that perfect competition in our economy because it is very hard to follow all the conditions that have been explained above. But if we are not too strict in applying the conditions, we may find pure competition in rice industry. If the conditions are not followed our economy could be considered as IMPERFECT COMPETITIVE. Its is divided in three parts: monopoly, oligopoly and monopolistic competition MONOPOLY The Absence of Competition This is the production of a certain or service like no other and without any product competing against it. There is no competitions so the producer may dictate the prices but maybe controlled by the govt. and set up large factories/plants. No product can compete with their product or service since there is no close substitute. MONOPOLISTIC COMPETITION 1. There are many buyers and sellers 2. Each firm produces and sells a slightly differentiated product 3. There is easy entry and exit Oligopoly Competition Among the Few Few join this competition They can connive and conspire so that they can dictate the price and control the market so that they can raise the profits in industry. Oligopolists can produce identical or differentiated products. Monopolistic Competition Includes many sellers and buyers but he products being sold and bought are similar. Differentiated products are products that differ somewhat in real qualities brought about by fashion, color, style, brand names, patents and others. FEATURES DESCRIPTIONS ATTRIBUTES TRAITS MANY BUYERS & SELLERS Many buyers Many sellers HOMOGENEOUS GOOD FARMERS PRODUCE SIMILAR APPLES, LEMONS AND BEEF MEATS SELLERS & BUYERS ARE WELL INFORMED ABOUT PRICESSOURCES OF SUPPLY & QUALITY EASE OF ENTRY & EXIT OF FIRMS NEW BUSINESS CAN BE SET UP AT ANYTIME no barrier or hindrance to enter into the industry as long as one has the ability and the capacity. At the same time, NO LOVE LOST FOR BUSINESS WHICH DECIDES TO EXIT OR LEAVE SO If there are many sellers & there are many buyersthere is competition among sellers & no one seller or buyer can influence the price of the good The COMPETITIVE firms are PRICE TAKERS Output Total Revenue Total Cost PROFIT 0 1 2 3 4 5 6 7 8 0 6 12 18 24 30 36 42 48 3 5 8 12 17 23 30 38 47 - 3 1 4 6 7 7 6 4 1 Marginal Revenue Marginal Cost - 6 6 6 6 6 6 6 6 - 2 3 4 5 6 7 8 9 PRICE = 6 (Dictated by the market & OUTPUT = 5 PROFIT MAXIMIZING OUTPUT = 5 GIVEN THE MARKET DICTATED PRICE OF 6! Using graphS MC MR ROFIT IS MAX 5 QUANTITY REVENUE, COST PRICE MR = PRICE 6 SHOULD YOU OPEN FOR LUNCH OR SHOULD YOU OPEN FOR DINNER ONLY??? LUNCHTO OPEN OR NOT HAVE YOU WALKED INTO A RESTAURANT FOR LUNCH AND FOUND IT ALMOST EMPTY? WHAT WOULD HELP YOU DECIDE? LUNCHTO OPEN OR NOT Keep in mind the distinction between fixed ( rent, kitchen equipment, tables, etc) and variable costs (food & wages) Variable costs matter/are relevant rather than the fixed costs LUNCHTO OPEN OR NOT IF THE REVENUE FROM FEW LUNCHTIME CUSTOMERS ARE ENOUGH TO COVER THE VARIABLE COST THEN IT SHOULD OPEN Dealing with losses TR > TVC, then the firm should keep producing TR < TVC, then the firm should shut down (temporarily closed) TR = TVC, the firm should be indifferent between shutting down and producing ONE SELLER UNIQUE PRODUCT MERALCO = ELECTRICITY UNIQUE PRODUCT MAYNILAD = WATER Economies of scale INTEL can produce CENTRAL MICRO- PROCESSORS at the lowest unit cost Exclusive ownership of a resource DE BEERS controls The market for DIAMOND Legal barriers = patents & licenses Pharmaceutical Companies are Given patents to Produce drugs IBM, KODAK, XEROX, POLAROID GE, DU PONT ONE SELLER HAS THE MARKET POWER TO INFLUENCE THE PRICE Using graphSPRICE & OUTPUT DECISIONS OF A MONOPOLIST MC MR PROFIT IS MAX Q* QUANTITY REVENUE, COST PRICE MONOPOLY PRICE P* D MONOPOLY 1. There is only one seller 2. The single seller sells a product for which there are no close substitutes 3. There are extremely high barriers to entry Legal barriers Economies of scale (low unit cost) Exclusive ownership of necessary resource FEW LARGE SELLERS SELL HOMOGENEOUS OR DIFFERENTIATED GOOD CONTROL OVER PRICE BUT MUTUAL INTERDEPENDENCE Few oligopolistic firms are price maker Consider how its rival will react to any change in price, output, quality or advertising Characterized by strategic behavior (self-interest) and mutual interdependence (compete or collude) LEGAL BARRIERS TO ENTRY OLIGOPOLY 1. There are few sellers and many buyers 2. Firms produce and sell either homogeneous or differentiated products 3. Some control over the price but mutual interdependence 4. There are significant barriers to entry such as patent rights, legal barriers etc It is the combination of monopoly and competitive markets but monopolistically competitive industries Are more competitive than monopolistic. RELATIVELY LARGE NUMBER OF SELLERS AND BUYERS Small market shares No collusion (agreement, conspiracy among the firms) Independent actions about price & quantity SELLS DIFFERENTIATED PRODUCTS (Real or imagined) Product attributes Service Location Brand names & packaging Some control over price PROMOTED BY HEAVY ADVERTISING DIFFERENTin terms of product attributes Product attributes functions, materials, design & workmanship How different are the two? Hp desktop Mac desktop Storage capacity, speed, Graphic displays, included Software & compatibility BAGSANYONE?? PRADA VS. VUITTON I CAN SERVE U BETTER! THE NEARNESS OF YOU SUPERMARKET VS. TINDAHAN NI ALING NENA BRAND NAMES & PACKAGING BECAUSE THEY ARE DIFFERENT Monopolistically competitive firms have some control over price Consumers buy product which they prefer and can afford But control over price is limited because of many substitutes EASY ENTRY AND EXIT Because competitors are small firms, Economies of scale are few and Capital requirements are low. WHY advertise??? The goal of product Differentiation and advertising is NONPRICE COMPETITION. To make price less of a factor In consumer purchases and Make product differences a Greater factor NUMBER OF FIRMS MONOPOLY Water Cable OLIGOPOLY Fuel Tennis Ball MONOPOLISTIC COMPETITION Novels Movies PERFECT COMPETITION Agricultural product Milk One firm Few firms Many firms Identical Product Differentiated Product Type of Product The Market Structures CharacterIstIcs MonopoIy OIIgopoIy MonopoIIstIc CompetItIon Perfect/Pure CompetItI on Number of SeIIers 6LQJOH)LUP $IHZ'RPLQDQW )LUPV /DUJH 9HU\ODUJH 7ype of Product 8QLTXH 1RFORVH 6XEVWLWXWH +RPRJHQHRXV 'LIIHUHQWLDW HG 'LIIHUHQWLDWHG +RPRJHQHRXV 6WDQGDUGL]H G BarrIers to entry &ORVH /LPLWHG (QWU\ )DLUO\(DV\ 2SHQ (DV\(QWU\ ControI over the PrIce 3ULFH0DNHUV &RQWUROOHGEXW QRW FRPSOHWHO\ &HUWDLQGHJUHH RILQIOXHQFH 3ULFH7DNHUV Non-PrIce CompetItIon 1RQRQSULFH &RPSHWLWLRQ ([WHQVLYHIRU GLIIHUHQWLDW HG 3URGXFWV ([WHQVLYH 1RQRQSULFH &RPSHWLWLRQ ExampIes: THIS IS THE END OF MICROEC ONOMICS !