MARKET STRUCTURE

MARKET STRUCTURE 市場結構

MARKET STRUCTURE 市場結構 Sit Hung, Winnie (s980427) Law Chi Hang, Jarvis (s981093) Chei Wing Yee, Aggie (s981747) Group 10 [ Major: Economics ]

Concept Tour

What is a “MARKET” ? Too Simple !

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 transactionis made.

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

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

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

Perfect Competition Free Entry and Exit • Firms are free to entry or leave the market Welcome to Perfectly Competitive Market Exit!! Entry!!

Quantity Price Quality Perfect Competition Perfect Market Information • Buyers & Sellers know all market information about goods e.g.

Perfect Competition Example: • The stock exchange is a close example

Same as P.C. Same as P.C. Monopolistic Competition Four Features: • 1. Large No. of Buyers & Sellers • 2. Differentiated Products • 3. Free Entry & Exit • 4. Imperfect Market Information

Monopolistic Competition Product Differentiation • A firm can use product differentiation to promote sales. Techniques are: • new designs • advertising • branding

Monopolistic Competition Imperfect Information of the Market • Sellers & Buyers don’t have perfect info. on price & quality of goods ? ?

Monopolistic Competition Example: • Rice is an example

Same as P.C. & M.C. Oligopoly Four features: 1. A Few Dominant Sellers 2. Similar but Differentiated Products 3. Entry is Restricted 4. Imperfect Market Information

Market behavior: • price rigidity • price leadership • non-price competition Oligopoly Few dominant sellers • Oligopolies has to consider the reactions of other firms before making any decision

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

Imperfectly Competitive Market Oligopoly Entry is Restricted • it is difficult because of government regulation/huge capital/technological requirements Entry?

Oligopoly Examples

Same as M.C. & O. 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

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...

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

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!!

Monopoly • Examples

Summary Monopoly Oligopoly Monopolistic Perfect Competition Competition 1. No. ofsellers 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

Revision (真人發音)

Revision (1) Oligopoly

Revision (2) Monopolistic Competition

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MARKET STRUCTURE