3. There are many producers and many consumers in
the market, and no business has total control over the
market price.
Consumers perceive that there are non-price
differences among the competitors products.
There are few barriers to entry and exit.
Producers have a degree of control over price.
Monopolistic Competition
Monopolistically competitive markets have the following
characteristics:
4. Product differentiation
Many firms
No entry and exit cost in the long run
Independent decision making
Some degree of market power
Major characteristics
5. In many markets, such as toothpastes and toilet
paper, producers practice product differentiation by
altering the physical composition of products, using
special packaging, or simply claiming to have superior
products based on brand images or advertising.
Examples
6. An oligopoly is a market structure in which a few
firms dominate. When a market is shared between a
few firms, it is said to be highly concentrated.
Oligopoly
7. Ability to set price
High barriers to entry and exit
Number of firms
Long run profits
Product differentiation
Perfect knowledge
Non-Price Competition
Characteristics
8. Five banks (Barclays, Halifax, HSBC, Lloyds
TSB and Natwest) dominate the UK banking sector,
they were accused of being an oligopoly by the
relative newcomer Virgin bank
Four companies
(Tesco, Sainsbury's, Asda and Morissons) share 74.4%
of the grocery market
Examples
9. A situation in which a single company or group owns
all or nearly all of the market for a given type of
product or service.
Monopoly
10. Price Maker: Decides the price of the good or product
to be sold.
High Barriers: Other sellers are unable to enter the
market of the monopoly.
Single seller: In a monopoly, there is one seller of the
good that produces all the output.
Price Discrimination: A monopolist can change the
price and quality of the product.
Characteristics
11. Examples of monopolies include:
Local telephone service
Water service
Cable television
The U.S. Postal Service
Examples
12. Perfect competition (sometimes called pure
competition) describes markets such that no
participants are large enough to have the market
power to set the price of a products.
Perfect competition
13. A large number buyers and sellers
No barriers of entry and exit
Perfect factor mobility
Zero transaction costs
Homogeneous products
characteristics