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Types of Competition

Types of Competition

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Types of Competition

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  1. Types of Competition Chapter 7

  2. Perfect Competition • Many sellers – • Similar Products • dry cleaners • agriculture • Easy entry • No control over price – • market is controlled by supply and demand

  3. Monopolistic Competition • Large number of sellers- • Similar but slightly different products – toothpaste, clothing, cosmetics • Relatively Easy Entry • some control over price – can raise prices without loss of customers • Non-price competition • product differences • advertising

  4. Oligopoly • An industry dominated by a few suppliers that exercise some control over price. • Automobile industry – U.S. big three • cereal companies • Substantial barriers to entry • customer loyalty • excessive capital • Non – price competition • Identical or slightly different products • Limited control over price- • any company can raise or lower its price but the other competitors react.

  5. Monopoly • Single seller • No Substitutes • Complete Control of the Market Price by controlling supply • No entry for competition • U.S. tries to prevent

  6. Natural Monopoly • Due to high costs it is cost efficient to have only one provider • Utilities- gas, electricity etc.