Types of Competition Chapter 7
Perfect Competition • Many sellers – • Similar Products • dry cleaners • agriculture • Easy entry • No control over price – • market is controlled by supply and demand
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
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.
Monopoly • Single seller • No Substitutes • Complete Control of the Market Price by controlling supply • No entry for competition • U.S. tries to prevent
Natural Monopoly • Due to high costs it is cost efficient to have only one provider • Utilities- gas, electricity etc.