competition

• monopolistic market characteristics ?

  • A single producer within a market – one business has 100% of the marketplace. This is known as a pure monopoly.
  • Likely to erect barriers to prevent others from entering their market.
  • Monopolists are called price makers as they have a significant influence on price.
  • UK and EU regard any business with over 25% of the market as having potential monopoly power
• What could be the Impact in the removal on an Monopoly?

  • May be greater choice of provider
  • Increased competition may force prices down
  • Greater efficiency may result as a result of competition
  • Isolated or non-profitable inaccessible locations may be denied a service
  • Prices may rise, the businesses previous economies of scale may no longer apply
• what is the definition of monopolistic competition ?

  the situation in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices.
• charecteristics of monopolistic competition

  • A large number of relatively small businesses in competiton with each other.
  • There are few barriers to entry.
  • Products are similar, but differentiated from each other.
  • Brand identity is relatively weak.
  • Businesses are not price takers; however, they only have a limited degree of control over the prices they charge.
• oligopoly markets characteristic ?

  • There are many businesses but only a few dominate the market.
  • Each business tends to have differentiated products with a strong brand identity.
  • Brand loyalty encouraged by the use of advertising and promotion
  • Prices can be stable for long periods, short price wars do occur.
  • Some barriers to entry do exist: for example, high start-up costs in relation to manufacturing.
• what are cartels - oligopoly

  When businesses in an oligopolistic market act together (collude), a cartel is formed. Cartels try to keep prices high, whilst the businesses involved share the market between themselves. This type of collusion

  has occurred in a wide range of industries: for example, the airline industry and the sports clothing industry. This formal collusion is illegal.
• advantages of oligopoly to consumers ?

  • Large size leads to economies of scale
  • High profits means money for innovation and investment
  • Oligopolies targeting a wide range of market segments provide variety and choice.
• definition of perfect competition ?

  a market in which many small firms produce virtually identical products at similar prices. With the to enter and leave the market freely. They

  don’t earn excessive profits.
• What is a characteristic of a perfect market regarding the number of businesses?

  There are many competing businesses
• Why can't any single business influence the market in a perfect market?

  Because no business is large enough
• What role do price leaders play in a perfect market?

  There are no price leaders
• What does it mean for businesses to be price takers?

  They must accept the market price
• What type of goods are sold in a perfect market?

  Homogenous goods
• What is the implication of homogenous goods for branding?

  There is no branding or differentiation
• How do businesses access technology in a perfect market?

  They have equal access to technology
• What is the effect of equal access to technology on productivity?

  All businesses have equal productivity levels
• What do consumers have in a perfectly competitive market?

  Full market information
• How does full market information benefit consumers?

  They know prices and available goods
• What is the freedom of businesses in a perfect market regarding market entry?

  They can enter or exit freely
• What does the absence of barriers to entry or exit imply for businesses?

  Businesses can adapt to market changes
• key point about perfect competition ?

  These unrealistic conditions mean that perfect competition is merely a model. In reality there is always some sort of branding or differentiation – whether it is the quality of products, price of products or the location of where products are sold. It has some use as the starting point to analyse the behaviour of other market structures in the real world.