Topic 5 Market Structure - South Dade Senior High School

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TOPIC 5 MARKET STRUCTURE
Mr. Kallusingh
MARKET STRUCTURE
The type of competition between firms/
businesses competing in the same industry
 The types of structures are usually grouped by
perfect competition, monopolistic competition,
monopoly, and oligopoly

PERFECT COMPETITION


Is characterized by a large number of well informed
buyers and sellers with identical products
Five Conditions
1- there are a lot of sellers and buyers
2- the products are the same like salt
3- buyers and sellers act independently
4- buyers and sellers are well informed on market price
5- buyers and sellers can move freely throughout the
business
MONOPOLISTIC COMPETITION
Has all the conditions of a perfect competition
except the products are a little different
 Product Differentiation- real or imagined
differences in products in the same industry
 Nonprice Competition- use of advertising,
giveaways, or other promotions to sway buyers

MONOPOLY
Opposite of perfect competition, only one seller
of a particular product
 Best examples would be telephone company,
cable provider, or electric company
 Natural Monopoly- better to have one company
to keep cost down like electric company

OLIGOPOLY
Market Structure in which a few large sellers
dominate the industry
 If one of the firms makes a change in price the
others usually follow
 Firms working together to do price-fixing is
collusion and is illegal
 Since price is similar the companies usually
use Nonprice competition to gain business

REGULATION
The government regulates natural monopolies
to ensure fair pricing, the companies must
submit and gain approval for price change
 Government can regulate business by changing
taxes to increase or decrease production
 Government has to control waste of companies
so that the environment is not destroyed

DEREGULATION
Is the act or process of removing or reducing
state regulations
 Can be done to try and help promote increased
productivity


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