CH. 9: MARKET STRUCTURECH. 9: MARKET STRUCTURE

1.1. How much How much COMPETITION is in a COMPETITION is in a MARKET.MARKET.

2.2. CRITERIACRITERIA

A. Market SizeA. Market Size

B. Product TypeB. Product Type

C. Entry/ExitC. Entry/Exit

D. InformationD. Information

E. Price ControlE. Price Control

PERFECT COMPETITIONPERFECT COMPETITION

A.A. Numerous buyers and Numerous buyers and sellerssellers

B.B. Homogeneous Product Homogeneous Product (similar/identical)(similar/identical)

C.C. Easy to enter and exitEasy to enter and exit

D.D. Information is easy to Information is easy to obtainobtain

E.E. Producer has no control Producer has no control over price (market)over price (market)

F.F. EXAMPLE: AgricultureEXAMPLE: Agriculture

MONOPOLYMONOPOLY

A.A. Single sellerSingle seller

B.B. No substitutesNo substitutes

C.C. No entryNo entry

D.D. No informationNo information

E.E. Producer controls Producer controls priceprice

F.F. EXAMPLE:EXAMPLE:

Microsoft/UtilitiesMicrosoft/Utilities

MONOPOLISTIC COMPETITIONMONOPOLISTIC COMPETITION

A.A. Numerous SellersNumerous SellersB.B. Differentiated Differentiated

ProductsProductsC.C. Relatively easy Relatively easy

entry/exitentry/exitD.D. Obtainable Obtainable

informationinformationE.E. Limited control over Limited control over

price( Mostly price( Mostly consumer)consumer)

F.F. EXAMPLE: EXAMPLE: Food/clothesFood/clothes

OLIGOPOLYOLIGOPOLY

A.A. Few SellersFew Sellers

B.B. Differentiated Differentiated productproduct

C.C. Barriers to entryBarriers to entry

D.D. Limited informationLimited information

E.E. Business has Business has significant control significant control over PRICEover PRICE

F.F. EXAMPLE: soda/pop, EXAMPLE: soda/pop, automobiles automobiles (domestic)(domestic)

KEY TERMS (KEY TERMS (LOOK THEM UP!LOOK THEM UP!))

Barriers to EntryBarriers to Entry Economies of scaleEconomies of scale PatentPatent CopyrightCopyright Product DifferentiationProduct Differentiation CartelCartel Antitrust LegislationAntitrust Legislation MergerMerger ConglomerateConglomerate DeregulationDeregulation