MARKET STRUCTURE

1
MARKET STRUCTURE
????
2
MARKET STRUCTURE
????
Sit Hung, Winnie (s980427)
Law Chi Hang, Jarvis (s981093)
Chei Wing Yee, Aggie (s981747)
Group 10 Major Economics
3
Concept Tour
4
What is a
MARKET ?
Too Simple !
5
What is a
MARKET ?
In Economics, a Market is defined as a context in
which exchange of goods and services between
sellers and buyers takes place.
A Market exists whenever a transaction is made.
6
Perfect Competition

• Four features
• 1. Large No. of Buyers Sellers
• 2. Homogeneous Products
• 3. Free Entry Exit
• 4. Perfect Market Information

7
Perfect Competition

• Large No. of Buyers Sellers
• the action of an individual buyer or seller is
  unable to affect the market price

8
Perfect Competition

• Homogeneous Products
• the products in the market must be identical in
  the eyes of consumers

9
Perfect Competition

• Free Entry and Exit
• Firms are free to entry or leave the market

Welcome to Perfectly Competitive Market
Exit!!
Entry!!
10
Perfect Competition

• Perfect Market Information
• Buyers Sellers know all market information
  about goods e.g.

11
Perfect Competition

• Example
• The stock exchange is a close example

12
Monopolistic Competition

• Four Features
• 1. Large No. of Buyers Sellers
• 2. Differentiated Products
• 3. Free Entry Exit
• 4. Imperfect Market Information

13
Monopolistic Competition

• Product Differentiation
• A firm can use product differentiation to promote
  sales.
• Techniques are

• new designs
• advertising
• branding

14
Monopolistic Competition

• Imperfect Information of the Market
• Sellers Buyers dont have perfect info. on
  price quality of goods

?
?
15
Monopolistic Competition

• Example
• Rice is an example

16
Oligopoly

• Four features
• 1. A Few Dominant Sellers
• 2. Similar but Differentiated Products
• 3. Entry is Restricted
• 4. Imperfect Market Information

17
Oligopoly

• Few dominant sellers
• Oligopolies has to consider the reactions of
  other firms before making any decision

18
Oligopoly

• Similar but Differentiate Products
• the products are close substitutes to one another

19
Oligopoly

• Entry is Restricted
• it is difficult because of government
  regulation/huge capital/technological requirements

Entry?
20
Oligopoly
Examples
21
Monopoly

• Four Features
• 1. Only One seller in the whole market
• 2. No close subsitiute
• 3. Highly Difficult (even impossible) to Entry
• 4. Imperfect (highly restricted) Market
  Information

22
Monopoly

• Only One Seller in the Whole Market
• buyers can obtain the goods or services from
  monopoly only

You can only buy my product! woo...woo...
23
Monopoly

• No Close Substitutes
• buyers are difficult to find another goods to
  satisfy the same want

24
Monopoly

• Highly Difficult (even impossible) to entry
• it is because of monopoly power

• Sources of Monopoly Power
• government ownership
• government franchise
• ownership of important resources
• huge capital requirement
• economies of scale

No Entry!!
25
Monopoly

• Examples

26
Summary
Monopoly Oligopoly Monopolistic Perfect
Competition Competition
1. No. of sellers
A few dominant sellers
One
Many
Many
2. No. of buyers
Many
Many
Many
Many
3. Products nature
No close substitute
Heterogeneous
Heterogeneous
Homogeneous
4. Ease of entry
Forbidden
Restricted
Easy to enter
Free entry
5. Information availability
Perfect Information
Restricted
Restricted
Easy to obtain
27
Revision (????)
28
Revision (1)
Oligopoly
29
Revision (2)
Monopolistic Competition
30
END