Competition in Markets

BTEC Business

Market Structures

• firms operate in markets, these are structured differently

• we can look at three different types of market structure and find examples of each:– monopoly– duopoly– oligopoly

Monopoly

• a market structure where there is a single seller of a unique product

• no competition, as the firm = the market

• potential for abuse of monopoly position• the market may be a natural monopoly

– having competition amongst firms in this kind of market would be costly

Example of Monopoly

• there may be significant savings to be had from having one company running the market

• Network Rail are responsible for the maintenance and upgrading of the UK rail network

• is it safer to have one company in charge?

Duopoly

• two large producers or sellers• exactly two equally dominant firms

seldom found• tend to compete or collude

Example of Duopoly

• global aircraft market• two dominant firms are Airbus and

Boeing• how do they compete with each

other?

Oligopoly

• markets dominated by a small number of large firms

• the most common types of market• large firms are involved in selling

either identical or very similar products

• significant barriers to entry into the industry

Example of Oligopoly

• the personal and domestic care product markets

• dominated by:– Unilever– Procter and Gamble– Colgate-Palmolive

Competition in Markets

BTEC Business

Market Structures

• firms operate in markets, these are structured differently

• we can look at three different types of market structure and find examples of each:– monopoly– duopoly– oligopoly

Monopoly

• a market structure where there is a single seller of a unique product

• no competition, as the firm = the market

• potential for abuse of monopoly position• the market may be a natural monopoly

– having competition amongst firms in this kind of market would be costly

Example of Monopoly

• there may be significant savings to be had from having one company running the market

• Network Rail are responsible for the maintenance and upgrading of the UK rail network

• is it safer to have one company in charge?

Duopoly

• two large producers or sellers• exactly two equally dominant firms

seldom found• tend to compete or collude

Example of Duopoly

• global aircraft market• two dominant firms are Airbus and

Boeing• how do they compete with each

other?

Oligopoly

• markets dominated by a small number of large firms

• the most common types of market• large firms are involved in selling

either identical or very similar products

• significant barriers to entry into the industry

Example of Oligopoly

• the personal and domestic care product markets

• dominated by:– Unilever– Procter and Gamble– Colgate-Palmolive