MARKET STRUCTURES

A monopoly is a MARKET STRUCTURE in which only ONE seller sells a product for which there are no close substitutes.

A monopoly is A PRICE SETTER, RESTRICTS THE MARKET and IS THE ONLY SELLER.

Monopoly

http://www.history.com/topics/john-d-rockefeller/videos/the-men-who-built-america-monopoly

Monopoly

Government Monopoly Technological Monopoly

Natural Monopoly Geographic Monopoly

TYPES OF MONOPOLIES

When the costs of production are lowest if only one firm provides output.

i.e. Water Companies

When a firm controls a manufacturing method, invention or a type of technology.

i.e. Apple® Patents

When there are no other producers or sellers within a given region.

i.e. Buffalo Sabres

When the government either owns and runs the business or authorizes only one producer.

i.e. the Post Officehttps://

www.youtube.com/watch?v=qBH64zFew6k

There are five conditions:1. MANY BUYERS & SELLERS - no one can

dominate2. STANDARDIZED PRODUCTS - no quality

difference3. INDEPENDENT BUYERS/SELLERS -

competition reduces prices

Pure/Perfect Competition

1. 2. 3. 4. WELL INFORMED BUYERS/SELLERS - a

weakness*5. FREEDOM TO ENTER/EXIT THE MARKET -

anyone can enterThe closest example of perfect competition is FOOD.

Pure/Perfect Competition

Monopolistic competition is different as it:OFFERS SIMILAR BUT NOT STANDARD PRODUCTS.

Four ways monopolistic competition tries to gain business through non-price competition:◦ Many buyers and sellers◦ Similar but differentiated products◦ Limited control of prices◦ Freedom to enter/exit the market

Uses DIFFERENTIATION to distinguish products.

Monopolistic Competition

https://www.youtube.com/watch?v=v7lw_vhxtNc https://www.youtube.com/watch?v=pyMTSr8hbow https://www.youtube.com/watch?v=WaGLeDE-Rwg https://www.youtube.com/watch?v=0GpUhULRIuA http://adage.com/article/global-news/mcdonald-s-air-burger-king-spot-youtube/231565/

An oligopoly is where a few companies control a large portion of a market.

Typically the four largest companies total 40% of a given industry.◦ Movies, Cereal, Cell Service Providers…

Oligopoly

If a seller in a oligopoly lowers their prices, other producers in that industry will LOWER PRICES.

However if a company tries to raise prices, the others won’t in order to GAIN CUSTOMERS.

Oligopoly

A CARTEL is an organization of COMPANIES and COUNTRIES that agree to act together to set PRICES and limit PRODUCTION.

OPEC

OPEC altogether contributes 40% of the world’s oil production.

Cartel

ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES

Members of OPEC

Nigeria

Venezuela

Ecuador

Angola

Libya

Algeria

SaudiArabia

Iran

Qatar

UAE

Iraq

Kuwait