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7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Dr.K.Baranidharan
Present by
131-07-2013
7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Engineering Economics
& Financial Accounting
MANAGERIALECONOMICS
231-07-2013
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CONCEPTS ANDTYPES OFMARKETS
ENGINEERING ECONOMICS &
FINANCIAL ACCOUNTING
CS FINAL YEAR & IT THIRD YEAR
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MARKET Market is defined as a place or point at which
buyers and sellers negotiate for exchange ofwell-defined products or services.
Traditionally, market was referred to a public
place in a village or town where provisions andother objects were brought for sale.
Based on location, markets are classified as
rural, urban, national or world markets. Market is said to exist wherever there is a
potential for trade
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Today with improving technology and modern
facilities, the definition of market has undergone a
sea change In the modern context, market refers to a meeting
point of buyer and seller, but not necessary a
geographical one.
It is not necessary that the buyer must meet the
seller in person.
While traditional avenues such as Value payable by
Post (VPP) continue to be popular, e-commercethrough internet has been the latest avenue for
firms to sell larger volumes of their products and
services via online negotiations where necessary.13 August 2013 5
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SIZE OF MARKET
The size of the market depends on
many factors such as nature of
products, nature of their demand,
tastes and preferences of customers,their income level, state of technology,
extent of infrastructure, including
telecommunications and information
technology, time factor in terms of
short run or long run and so on13 August 2013 6
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MARKET CONDUCT Market conduct refers to the behavioral aspects
of sellers and buyers operating in a market.
Market conduct consists of:
A) the business objectives of the firms such asprofit maximization and sales maximization or
market share. B) customizing the products as per the specific
requirements of buyers such as assembling of apersonal computer as per the specifications ofthe buyer and making it cost effective.
C) improving the quality of the product andmaking it available at a lower price
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D) marketing strategies and tactics adopted by
the firms to establish competitive edge over rival
firms. These include various pricing strategies such as
deliberately charging a low price in order to
penetrate into the market and expand salesquickly, pricing the product deliberately as a
higher level in order to make as much profits as
possible in the quickest possible time.
Change in advertising and sales promotion
strategies, variations in the quality and make of
the products, innovative packaging techniques
and design etc.,13 August 2013 8
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MARKET PERFORMANCE When the suppliers/sellers utilize the economic
resource/inputs to their maximum efficiency and to the
ultimate benefit of consumers, the market is said to be
effective in its performance.
The following are the essentials of market performance:
A)Efficiency in production:
When the process of production of goods and services
is cost effective, efficiency is said to prevail in
production processes.
The firm should make efforts to minimize the costs
while maximizing the output. Scale economics should
be fully exploited.13 August 2013 9
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B) Efficiency in distribution:
Distribution is the process of storing and
moving the products to consumers often thoughintermediaries such as wholesalers and retailers.
Channel of distribution is the route followed for
physical distribution of a product form themanufacturer to the ultimate consumer.
The channel of distribution should be effectively
manag3ed to bring down the distribution coststo the minimum and to make the product
available to the ultimate customer without any
sort of inconvenience.13 August 2013 10
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C) Fixation of Prices:
The price should be fixed at reasonable level leavingreasonable profit/return to the suppliers/sellers.
D) Product performance: The customers always look for variety,
sophistication in design and quality at reasonableprice. The firm should provide value-for-money.
E) Improved technology: Innovations in technology bring down the costs of
product and process manufacturing and inprove thefeatures of the product.
The growing demands of the customers can be metbetter though introduction of process and productinnovations. These also reduce the supply costs inreal terms.
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MARKET STRUCTURE
Market structure refers to the
characteristics of a market that influence
the behavior and performance of firms that
sell in that market.
The structure of market is based on the
following features:
1.The degree of seller concentration: This refers to the number of sellers and
their market share for given product or
service in the market13 August 2013 12
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2.The degree of buyer concentration:
This refers to the number of buyers and their extentof purchase of a given product or service in the
market. 3.The degree of product differentiation:
A firm may differentiate its product form that of thecompetitor though advertising, creating a brand
image, product design, variation in quality,packagining location and so on.
This refers to the extent by which the product ofeach trader is differenciated from that of the other.
Product differentiation can take several forms suchas varieties, brands, all of which are sufficientlysimilar to distinguish them, as a group, from otherproduct
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4. The conditions of entry to the market:
Often, there could be certain
restrictions to enter or exit from the
market. The degree of ease with which
one can enter the market or exit from italso determines the market structure.
In other words there could be large
number of firms if there arent manyrestrictions on entering the market and
vice versa
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COMPETITIVE MARKET SITUATIONS
The lesser the power an individualfirm has to influence the market inwhich it operates, the more
competitive the market is. If a firmcan influence the market by offeringproducts and services at better or
attractive terms and conditions, it issaid to have grater power to influencethe market.
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TYPES OF COMPETITION The interconnected characteristics of a market, such as
the number and relative strength of buyers and sellers
and degree ofcollusion among them, level and forms of
competition, extent ofproduct differentiation, and ease
ofentry into and exit from the market
Four basic types of market structure are (1) Perfectcompetition: many buyers and sellers, none being able
to influence prices. (2) Oligopoly: several large sellers
who have some control over the prices. (3) Monopoly:
single seller with considerable control over supply andprices. (4) Monopsony: single buyer with considerable
control over demand and prices.
13 August 2013 16
http://www.businessdictionary.com/definition/characteristic.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/strength.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.businessdictionary.com/definition/competition.htmlhttp://www.businessdictionary.com/definition/product-differentiation.htmlhttp://www.businessdictionary.com/definition/entry.htmlhttp://www.businessdictionary.com/definition/exit.htmlhttp://www.businessdictionary.com/definition/type.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/able.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/oligopolistic.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/monopsony.htmlhttp://www.businessdictionary.com/definition/demand.htmlhttp://www.businessdictionary.com/definition/demand.htmlhttp://www.businessdictionary.com/definition/monopsony.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/oligopolistic.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/able.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/type.htmlhttp://www.businessdictionary.com/definition/exit.htmlhttp://www.businessdictionary.com/definition/entry.htmlhttp://www.businessdictionary.com/definition/product-differentiation.htmlhttp://www.businessdictionary.com/definition/product-differentiation.htmlhttp://www.businessdictionary.com/definition/product-differentiation.htmlhttp://www.businessdictionary.com/definition/competition.htmlhttp://www.businessdictionary.com/definition/form.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/strength.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/characteristic.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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PERFECT COMPETITION
The theoretical free-market situation in which the
following conditions are met: (1) buyers and sellers aretoo numerous and too small to have
any degree of individual control over prices, (2) all
buyers and sellers seek to maximize
their profit (income), (3) buyers and seller can freely
enter or leave the market, (4) all buyers and sellers
have access toinformationregardingavailability, prices,
and quality ofgoods being traded, and (5) all goods ofa particular nature are homogeneous, hence
substitutable for one another. Also called perfect
market or pure competition.
13 August 2013 17
http://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/condition.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/individual.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/access.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/regarding.htmlhttp://www.businessdictionary.com/definition/availability.htmlhttp://www.businessdictionary.com/definition/quality.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/trade.htmlhttp://www.businessdictionary.com/definition/homogeneous.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/perfect-market.htmlhttp://www.businessdictionary.com/definition/perfect-market.htmlhttp://www.businessdictionary.com/definition/pure-competition.htmlhttp://www.businessdictionary.com/definition/pure-competition.htmlhttp://www.businessdictionary.com/definition/pure-competition.htmlhttp://www.businessdictionary.com/definition/pure-competition.htmlhttp://www.businessdictionary.com/definition/perfect-market.htmlhttp://www.businessdictionary.com/definition/perfect-market.htmlhttp://www.businessdictionary.com/definition/perfect-market.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/homogeneous.htmlhttp://www.businessdictionary.com/definition/trade.htmlhttp://www.businessdictionary.com/definition/goods.htmlhttp://www.businessdictionary.com/definition/quality.htmlhttp://www.businessdictionary.com/definition/availability.htmlhttp://www.businessdictionary.com/definition/regarding.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/access.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/income.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/individual.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/condition.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/free-market.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Features of perfect competition 1. Large number of buyer and sellers:
Each buyer buys a small quantity of the totalamount.
Each seller is so large that no single buyer orseller can influence the price and affect themarket.
Buyers and sellers are price takers in the purelycompetitive market.
Each seller (or firm) sells its products at the pricedetermined by the market.
Similarly, each buyer buys the commodity at the
price determined by the market.13 August 2013 18
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2.Free entry and exit:
Under perfect competition, there will be
no restriction on the entry and exit of bothbuyers and sellers. If the existing sellers
start making abnormal profits, new sellers
should be able to enter the market freely.
This will bring down the abnormal profits
to the normal level. Similarly, when losses
will occur existing sellers may leave the
market. However, such free entry or free
exit is possible only in the long run, but not
in the short-run.13 August 2013 19
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3.Perfect knowledge:
Perfect competition implies perfect
knowledge on the part of buyers and
sellers regarding the market
conditions. As a results, no buyer willbe prepared to pay a price higher than
the prevailing price. Sellers will not
charge a price higher or lower thanthe prevailing price. In this market,
advertisement has no scope.13 August 2013 20
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4.Perfect mobility of factors of
production:
The second perfection mobility of
factors of production from one use to
another use. This feature ensures thatall sellers or firms get equal
advantages so far as services of factors
of production are concerned. This isessential to enable the firms and
industry to achieve equilibrium.13 August 2013 21
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5. Homogenous Product
In this case, all sellers producehomogeneous i.e. perfectly
identical products. All products are
perfectly same in terms of size,shape, taste, colour, ingredients,
quality, trade marks etc. Thisensures the existence of single
price in the market.13 August 2013 22
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6. Each firm is a price taker:
A firm in a perfect market cannotinfluence the price though its
own individual actions. It has no alternative other than
selling its products at the priceprevailing in the market
13 August 2013 23
T t l R (TR)
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Total Revenue(TR),
Average Revenue(AR) and
Marginal Revenue(MR)
Total revenue ( TR ) is the total amount
of money(or some other good) that afirm receives from the sale of its goods.
It the firm practices single pricing
rather than price discrimination, TR =total expenditure of the consumer = P
x Q13 August 2013 24
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Total Revenue, Average Revenue and
Marginal Revenue Average revenue ( AR ) is the total
amount of money(or some other good)
that a firm receives from the sale
divided by the number of units of
goods sold. AR = TR/Q, since TR=P x Q, then AR =
P for single pricing practice13 August 2013 25
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Total Revenue, Average Revenue and
Marginal Revenue Marginal revenue ( MR ) is the
change in total revenue resultingfrom selling an extra unit of goods.
MR = TR/Q, where TR =change in TR due to change in Q,
Q = change in Q13 August 2013 26
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Imagine that one more book is sold. Since the selling is
done at a given market price of rs.10 the additional
revenue (MR) by selling one more unit will be rs.10
Consider this example. Your are selling notebooks. Eachbooks cost rs.10 your are not going to given any discount or
concession even if a buyer purchases more number of
books at a time. Suppose 10m books are sold.
The total (TR) revenue is rs.100. the average revenue (AR) isrs.10 (100/10).
Suppose you are selling one more notebook. Since you are
selling at the given market price of rs.10, the additional
revenue (MR) by selling one more unit will be rs.10
Thus, under perfect competition Price =Average Revenue
(AR) = Marginal Revenue (MR)
13 August 2013 27
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IMPERFECT COMPETITION
Real world' competition that is less effective in
lowering price levels nearer to the cost levels than
the theoretical perfect competition. Conditions
that help cause imperfect competition include (1)restrictedflow ofinformationon costs and prices,
(2) near monopoly power of some suppliers, (3)
collusion among sellers to keep prices high, and(4) discrimination by sellers among buyers on the
basis of their buying power.
13 August 2013 28
http://www.businessdictionary.com/definition/competition.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/cost.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/condition.htmlhttp://www.businessdictionary.com/definition/restricted.htmlhttp://www.businessdictionary.com/definition/flow.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/on-cost.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/monopoly-power.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/high.htmlhttp://www.businessdictionary.com/definition/discrimination.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/buying-power.htmlhttp://www.businessdictionary.com/definition/buying-power.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/discrimination.htmlhttp://www.businessdictionary.com/definition/high.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/monopoly-power.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/on-cost.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/flow.htmlhttp://www.businessdictionary.com/definition/restricted.htmlhttp://www.businessdictionary.com/definition/condition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/cost.htmlhttp://www.businessdictionary.com/definition/effective.htmlhttp://www.businessdictionary.com/definition/competition.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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MONOPOLY
Market situation where one producer (or
a group of producers acting in concert)controlssupply of a good or service, and
where the entry of new producers is
prevented or highly restricted.
Monopolist firms (in their attempt to
maximize profits) keep the pricehigh andrestrict the output, and show little or no
responsiveness to the needs of their
customers.13 August 2013 29
http://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/group.htmlhttp://www.businessdictionary.com/definition/producer.htmlhttp://www.businessdictionary.com/definition/acting.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/entry.htmlhttp://www.businessdictionary.com/definition/restricted.htmlhttp://www.businessdictionary.com/definition/monopolist.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/high.htmlhttp://www.businessdictionary.com/definition/output.htmlhttp://www.businessdictionary.com/definition/need.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/need.htmlhttp://www.businessdictionary.com/definition/output.htmlhttp://www.businessdictionary.com/definition/high.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/profit.htmlhttp://www.businessdictionary.com/definition/monopolist.htmlhttp://www.businessdictionary.com/definition/restricted.htmlhttp://www.businessdictionary.com/definition/entry.htmlhttp://www.businessdictionary.com/definition/final-good-service.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/acting.htmlhttp://www.businessdictionary.com/definition/producer.htmlhttp://www.businessdictionary.com/definition/group.htmlhttp://www.businessdictionary.com/definition/market.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Most governments therefore try to control
monopolies by (1) imposing price controls, (2) taking
over their ownership (called 'nationalization'), or (3)
by breaking them up into two or more competing
firms. Sometimes governments facilitate the
creation of monopolies for reasons of national
security, to realize economies of scale for competinginternationally, or where two or more producers
would be wasteful or pointless (as in the case of
utilities). Although monopolies exist in varying
degrees (due to copyrights, patents, access to
materials, exclusive technologies, or unfair trade
practices) almost no firm has a complete monopoly
in the era ofglobalization13 August 2013 30
MONOPOLY COMPETITION
http://www.businessdictionary.com/definition/government.htmlhttp://www.businessdictionary.com/definition/price-control.htmlhttp://www.businessdictionary.com/definition/ownership.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/nationalization.htmlhttp://www.businessdictionary.com/definition/competing.htmlhttp://www.businessdictionary.com/definition/security.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/utility.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/due.htmlhttp://www.businessdictionary.com/definition/copyright.htmlhttp://www.businessdictionary.com/definition/patent.htmlhttp://www.businessdictionary.com/definition/access.htmlhttp://www.businessdictionary.com/definition/material.htmlhttp://www.businessdictionary.com/definition/technology.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/globalization.htmlhttp://www.businessdictionary.com/definition/globalization.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/unfair-trade-practice.htmlhttp://www.businessdictionary.com/definition/technology.htmlhttp://www.businessdictionary.com/definition/material.htmlhttp://www.businessdictionary.com/definition/access.htmlhttp://www.businessdictionary.com/definition/patent.htmlhttp://www.businessdictionary.com/definition/copyright.htmlhttp://www.businessdictionary.com/definition/due.htmlhttp://www.businessdictionary.com/definition/degree.htmlhttp://www.businessdictionary.com/definition/utility.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/economies-of-scale.htmlhttp://www.businessdictionary.com/definition/security.htmlhttp://www.businessdictionary.com/definition/competing.htmlhttp://www.businessdictionary.com/definition/nationalization.htmlhttp://www.businessdictionary.com/definition/call.htmlhttp://www.businessdictionary.com/definition/ownership.htmlhttp://www.businessdictionary.com/definition/price-control.htmlhttp://www.businessdictionary.com/definition/price-control.htmlhttp://www.businessdictionary.com/definition/price-control.htmlhttp://www.businessdictionary.com/definition/government.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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MONOPOLY COMPETITION Market situation midway between the extremes of
perfect competition and monopoly, and displaying
features of the both. In such situations firms are free to
enter a highly competitive market where several
competitors offer products that are close (but not
perfect) substitutes and, therefore, prices are at thelevel ofaverage costs (a feature of perfect competition).
Also, some consumers have a preference for one
product over another that is strong enough to make
them keep buying it even when its price increases, thusgiving its producer a small amount of market power (a
feature of monopoly). Monopolistic situation is a
common situation in all free markets13 August 2013 31
http://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/feature.htmlhttp://www.businessdictionary.com/definition/free.htmlhttp://www.businessdictionary.com/definition/competitive.htmlhttp://www.businessdictionary.com/definition/competitor.htmlhttp://www.businessdictionary.com/definition/offer.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/perfect.htmlhttp://www.businessdictionary.com/definition/substitutes.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/average-cost.htmlhttp://www.businessdictionary.com/definition/consumer.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/producer.htmlhttp://www.businessdictionary.com/definition/amount.htmlhttp://www.businessdictionary.com/definition/market-power.htmlhttp://www.businessdictionary.com/definition/common.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/free-market.htmlhttp://www.businessdictionary.com/definition/common.htmlhttp://www.businessdictionary.com/definition/market-power.htmlhttp://www.businessdictionary.com/definition/market-power.htmlhttp://www.businessdictionary.com/definition/market-power.htmlhttp://www.businessdictionary.com/definition/amount.htmlhttp://www.businessdictionary.com/definition/producer.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/consumer.htmlhttp://www.businessdictionary.com/definition/average-cost.htmlhttp://www.businessdictionary.com/definition/average-cost.htmlhttp://www.businessdictionary.com/definition/average-cost.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/substitutes.htmlhttp://www.businessdictionary.com/definition/perfect.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/offer.htmlhttp://www.businessdictionary.com/definition/competitor.htmlhttp://www.businessdictionary.com/definition/competitive.htmlhttp://www.businessdictionary.com/definition/free.htmlhttp://www.businessdictionary.com/definition/feature.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/market.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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DUOPOLY
Market situation in which only
sellers supply a particularcommodity to many buyers. Either
seller can exert some control overthe output and prices, but must
consider the reaction of its sole
competitor (unless both have
formed an illegal collusive duopoly).13 August 2013 32
http://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/commodity.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/output.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/reaction.htmlhttp://www.businessdictionary.com/definition/competitor.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/competitor.htmlhttp://www.businessdictionary.com/definition/reaction.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/output.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/commodity.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/market.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Example
A soft drink market with twocompanies such as Pepsi and Coke is
called duopoly.
Basic facilities for satellite
communication are presently
provided by the MahanagarTlelphoine Nigam Limited (MTNL)
and Videsh Sanchar Nigam Limited
(VSNL)13 August 2013 33
OLIGOPOLY
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OLIGOPOLY Market situation between, and much more common
than, perfect competition (having many suppliers)
and monopoly (having only one supplier). Inoligopolistic markets, independent suppliers (few in
numbers and not necessarily acting in collusion) can
effectively control the supply, and thus the price,thereby creating a seller's market.
They offer largely similar products, differentiated
mainly by heavy advertising and promotionalexpenditure, and can anticipate the effect of one
another's marketing strategies. Examples include
airline, automotive, banking, and petroleum
markets. Mirror image of oligopsony.13 August 2013 34
E l
http://www.businessdictionary.com/definition/common.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/oligopolistic.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/independent.htmlhttp://www.businessdictionary.com/definition/acting.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/hard-market.htmlhttp://www.businessdictionary.com/definition/offer.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/advertiser.htmlhttp://www.businessdictionary.com/definition/expenditure.htmlhttp://www.businessdictionary.com/definition/marketing-strategy.htmlhttp://www.businessdictionary.com/definition/examples.htmlhttp://www.businessdictionary.com/definition/banker.htmlhttp://www.businessdictionary.com/definition/petroleum.htmlhttp://www.businessdictionary.com/definition/image.htmlhttp://www.businessdictionary.com/definition/oligopsony.htmlhttp://www.businessdictionary.com/definition/oligopsony.htmlhttp://www.businessdictionary.com/definition/oligopsony.htmlhttp://www.businessdictionary.com/definition/image.htmlhttp://www.businessdictionary.com/definition/petroleum.htmlhttp://www.businessdictionary.com/definition/banker.htmlhttp://www.businessdictionary.com/definition/examples.htmlhttp://www.businessdictionary.com/definition/marketing-strategy.htmlhttp://www.businessdictionary.com/definition/marketing-strategy.htmlhttp://www.businessdictionary.com/definition/marketing-strategy.htmlhttp://www.businessdictionary.com/definition/expenditure.htmlhttp://www.businessdictionary.com/definition/advertiser.htmlhttp://www.businessdictionary.com/definition/product.htmlhttp://www.businessdictionary.com/definition/offer.htmlhttp://www.businessdictionary.com/definition/hard-market.htmlhttp://www.businessdictionary.com/definition/hard-market.htmlhttp://www.businessdictionary.com/definition/hard-market.htmlhttp://www.businessdictionary.com/definition/labor-rate-price-variance.htmlhttp://www.businessdictionary.com/definition/supply.htmlhttp://www.businessdictionary.com/definition/control.htmlhttp://www.businessdictionary.com/definition/collusion.htmlhttp://www.businessdictionary.com/definition/acting.htmlhttp://www.businessdictionary.com/definition/independent.htmlhttp://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/oligopolistic.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/perfect-competition.htmlhttp://www.businessdictionary.com/definition/common.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Example
Car manufacturing companies (such as Maruti-
Suzuki, Hindustan Motors, Daewoo, Toyota etc.,)and Newspapers (such as The Hindu, Indian Express,Times of India, Economic Times, Eenadu, etc,)
In oligopoly, each individual seller or firm can affect
the market price. When The Times of India slashedthe price of ots daily newspaper, most othercompanies such as Indian Express and The Hindufollowed suit.
Oligopolistic market situations are very common insectors relating to manufacturing, transportation,communication and so on.
13 August 2013 35
O O SO
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MONOPSONY
A term used to describe a market
where a very large buyer typically
dominates the price action. In a
monopsony, the large buyer istypically able to force prices to
decline and this type of market
contrasts with a monopoly where a
large seller is able to drive up
rices.13 August 2013 36
http://www.businessdictionary.com/definition/market.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/action.htmlhttp://www.businessdictionary.com/definition/able.htmlhttp://www.businessdictionary.com/definition/force.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/drive.htmlhttp://www.businessdictionary.com/definition/drive.htmlhttp://www.businessdictionary.com/definition/seller.htmlhttp://www.businessdictionary.com/definition/monopoly.htmlhttp://www.businessdictionary.com/definition/price.htmlhttp://www.businessdictionary.com/definition/force.htmlhttp://www.businessdictionary.com/definition/able.htmlhttp://www.businessdictionary.com/definition/action.htmlhttp://www.businessdictionary.com/definition/buyer.htmlhttp://www.businessdictionary.com/definition/market.html7/27/2019 CONCEPTS AND TYPES OF MARKETS, ENGINEERING ECONOMICS & FINANCIAL ACCOUNTING
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Example
The Food Corporation of
India is the only
government organization
that purchase agricultural
produce such as rice and
so on13 August 2013 37
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DUOPSONY
Market situation in which only
two buyers create the entire
demand for a commodity
supplied by many sellers a
mirror image of duopoly.
13 August 2013 38
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OLIGOPSONY
Market situation where
presence of few buyers and
many suppliers creates a
buyer's market. Mirror image
of oligopoly.
13 August 2013 39
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Example
A few news paper publishing
companies in India and all these buy
newsprint from the Government of
India. A good number of computer
assembly operators who buy
computer components on a
wholesale basis.
13 August 2013 40
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Dr.K.Baranidharan
Thank youK YOU
4131-07-2013
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