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Monopoly - PowerPoint PPT Presentation

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Economic market in which there is a single seller or producer to supply a product to meet the needs of that sector. There should be no threat of entry of another competitor in the market. In a monopoly situation firms set a higher price and offers less quantity. In a monopoly market is usually called "good monopoly" when it comes after a consequence. When the majority of consumers buy that product of that company without the influence of no-one and trough any other interference….Here you are an exemple of “bad monopoly”, when it is made by the influence of the government. They decided to privatize Telefónica and giving them the enter comunication net in the country.


1.- Only one seller

2.- Barries to enter in the market

3.- Decreasing demand

a.- Consumers buy when prices are cheaper

b.- Firms produce and sell more “only” when prices decrease

Fixed telephony

Market share 2009

Telefónica: 78.6%

Ono : 8.6%

Orange: 2.6%

Vodafone: 2.0%

Resto: 8.2%

As we see…

1.- Only one seller: Telefónica

2.- Barries to enter : Telefónica has got the entire market in

its pocket, since the government decided

to privatize it in the 80's.

3.- Decreasing demand:

a.- Most people buy when Telefónica offers special prices

for special services

b.- Telefónica produces more when makes special offers at

special prices


Oligopoly market dominated by a small number of producers or distributors or sellers. An oligopolistic market may have, on occasion, a high degree of competitiviness. Producers have incentives to work by fixing prices or sharing of market segments, often occur long periods of price stability. Producers are limited to compete by advertising their products


1.- There are a few producers and a lot of consumers

2.- There are barriers to enter and exit out of the market

3.- Firms choose their on level of prices, Why?

a.- Depending of the market situation they take

differents decisions.Ex.: doing advertising

TV channels in Spain

Share 2009

C Temáticos: 17.0%

TV1: 16.4%

TV Privat : 15.3%

TeleOno: 15.1%

Antena 3: 14.7%

Forta: 13.6%

Cuatro: 8.2%

La Sexta: 6.8%

Digital +: 4.7%

Otras: 2.3%

Locales: 1.3%

As we see…

1.- A few producers and millions of consumers

2.- Barriers to enter: very difficult and expensive to open

a chanel television

3.- Chanel choose their on level of prices

a) When they make publicity for other companies

b) Doing advertisment of themselves

Monopolistic Competition

Monopolistic competition is defined as a organization of a market which you can find many companies that sell similar product but not identical, thanks to the differentiation of products, sellers have some level of prices charged under control to sell their product. Competition is not based on the prices, but other added values, such as product quality. The producers have easy entry and exit. Advertising industries must play a very important. The products despite be similar, not identical.

Monopolistic Competition

1.- There are no barriers to enter

2.- The product is differentiated

3.- There is a leader which has got a big

Influence in the market. The rest of the companies

follow the leader.

Yoghurt Production 2009

Danone: 50.0%

Pascual: 05.0%

Nestle Lactalis : 04.0%

Dhul: 04.0%

Clesa: 03.0%

Otras; hasta

50 empresas: 34.0%

As we see…

1.- No barriers to enter. There are a lot of companies

2.- The product is differentiated. Who doesn´t know

what is a Danone!?

3.- Doesn´t matter what kind of products offer the rest

Of the firms. All of them are behind Danone.They try to offer the same of Danone but a bit different in order to get more customer

Perfect competition
Perfect Competition

  • Market in which there are many companies that offer the same product, so that none of them has an influence on prices.It is characterized by the existence of many suppliers andapplicants so that they can not impose any restriction on price. Perfect competition, as will be appreciated, it is then the description of some existing market but an economic model which can understand the functioning of a market economy