perfect competition (number & size of firms)
-large number of firms all producing essentially the same product
-many firms
-not large
-each is small compared to total supply
-most competitive
perfect competition (ease of entry into the market)
-start-up costs: the expenses a firm must pay before it can begin to produce and sell goods
-barriers of technology
-low start-up price
-easy to enter or exit
perfect competition (pricing influence of individual firms)
the market determines price without any influence from individual suppliers or consumers
-no pricing influence
perfect competition (types of products)
-identical
-homogenous
-commodity: a product that is considered the same regardless of who makes or sells it
perfect competition examples
-low-grade gasoline
-notebook paper
-milk
-agricultural products (tomatoes, corn, wheat)
monopolistic competition (number and size of firms)
there are many different firms
-second most competitive
monopolistic competition (ease of entry into the market)
there are only a few artificial barriers to entry which these firms do not face
monopolistic competition (pricing influence of individual firms)
they have very little control over the prices
-very little pricing competition
monopolistic competition (types of products)
-bagel shops
-ice cream stands
-gas stations
-branding
-advertising
-product characteristics
-service levels
monopolistic competition examples
the market for denim jeans is monopolistically competitive because they vary by size, color, and designer
oligopoly (number and size of firms)
only a few different firms but all are very large
-third most competitive
-few dominate
> 70-80%
oligopoly (ease of entry into the market)
the barriers to enter the market are very high
-high start-up costs
oligopoly (pricing influence of individual firms)
they have some control over prices
-oligopolies have some pricing power
oligopoly (types of products)
-airline
-automotive
-banking markets
-variety of products
-high capital costs
oligopoly examples
a market structure in which a few large firms demonstrate a market
-breakfast cereals
-airlines
-soda
monopoly (number and size of firms)
-one large company
-least competitive
-economics of scale
"bigger is better
monopoly (ease of entry into the market)
barriers to entry are the principal condition that allows monopolies to exist
-franchises
-many barriers: competitive, etc
-licenses, patents, etc
monopoly (pricing influence of individual firms)
-total control
-natural government
-fewer goods at higher prices
monopoly (types of products)
-no good substitutes
-public utilities
monopoly examples
-AT&T
-MLB
-NFL
-US post office (government monopoly)
-Sun Prairie Water and Light
-Diamond mines are controlled by a monopoly (Dee Beers)