PERFECT COMPETITIONUNDER

MonopolyOligopolyMonopolistic competitionPerfect competition

TYPES OF MARKET

Market structure where competition among sellers and buyers prevails in its most perfect form.

Large number of sellers and buyers Price taking Product homogeneity Free entry and exit

PERFECT COMPETITION

TABLE : PRICE DETERMINATION UNDER PERFECT COMPETITION

Price (Rs)

Market

Demand

Units

Market

Supply

Units

Pressure on

Price

5 10 50 D ‹ S

4 20 40 D ‹ S

3 30 30 D = S

2 40 20 D › S

1 50 10 D › S

What happens when price becomes higher or lower then the Equilibrium Price ?

IMPORTANT OBSERVATIONS.

Price under perfect competition is determined by the industry, not by an individual fi rm.

Price under perfect competition is known as equilibrium price because it corresponds to equilibrium of the industry.

An individual fi rm under perfect competition cannot change the equilibrium price.

Excess demand occurs when, corresponding to the existing price, demand for commodity is greater than its supply (D › S).

Excess supply occurs when, corresponding to the existing price, supply of a commodity is greater than its demand (S › D).

Online marketplace Large scale trade of varied items

3 segments -market places - payments - communicationsSource of revenue

SAY HELLO TO EBAY

Products on the web site are available at prices better than those one can find in traditional or online stores. i.e. large buyers

Anyone can sell nearly anything i.e. large sellersTransaction by individual buyer and seller is very

small therefore they are price takers.Limit to each user for listing the product so no

chance of monopoly No possibility of economies of scale

WHY EBAY PERFECT COMPETITION

Competitive advertising does not occur because the products are categorized and sub- categorized into homogeneous products.

Entry and exit as a business in eBay is quite easy.

No browsing cost for buyers and the eBay fee schedule identical selling costs for all the sellers.

Rational behavior and the part of sellers and buyers ,eg: play station 3.

CONTI…..

eBay is a place to buy ,sell and window shop.

The products on the website have prices better than traditional or other online stores.

Individual seller ,small retailer or big company all are sellers and can sell nearly anything by listing their items on eBay.

Huge variety of things are available with enormous details

E-BAY AND PERFECT COMPETITION

Buyers and sellers both are price takers.Only 10 simultaneous listing for identical good is allowed ,so no possibility of economies of scale.

Competitive advertising does not occur as products are categorized and sub categorized into homogeneous ones.

Entry and exit as a business on eBay is very easy.

Several sellers of common products and several buyers are features of eBay.

CONTI…

EASY AVALIBILITY - Whatever you want to buy, whether its large or small, cheap or expensive, everyday or just plain weird, the chances are you can find it on eBay.

AN online marketplace where you can buy things from all over the world, without leaving your home. You can get things that you would never think anyone would bother to sell, and you can get them cheaply. The powerful search engine means that you can find things you will like without even knowing exactly what you are looking for.

BUYERS ADVANTANGE OF EBAY

Money can be send quickly and electronically to almost all of these sellers, without worrying about currency conversion or exchange rates or anything else.

For bargains, eBay is an ideal place to buy.

CONTI...

THANKYOU