Oligopoly and Monopolistic Competition

1. Oligopoly and Monopolistic Competition

2. What you will learn... Oligopoly Monopolistic competition Take this challenge

3. sellers MARKET sellers Oligopoly Oligopoly is a market structure with several ________ sellers. dominant A market structure with only two sellers is called a _______. duopoly

4. ______ dominant sellers. Oligopolistic sellers tend to sell heterogeneous goods. Sellers are interdependent. Entry is _________________. ________ information of the market. Oligopoly Features Several restricted or difficult Imperfect

5. They can choose what _____ to set to maximise their ______. Oligopolists are ____________. If one seller lowers the price to attract more customers, other sellers will follow. So _________ may break out. Oligopoly 1. Oligopolistic sellers are price-searchers Behaviour of firms price profits 2. The possibility of a ‘price war’ interdependent price wars

6. The dominant sellers may act as ______ in setting ______. The ___________ will then follow. $ $ price price Oligopoly 3. Price leadership Behaviour of firms leaders prices smaller firms

7. Firms often engage in __________________ . Example Lucky draws organised by a supermarket. Oligopoly 4. Non-price competition Behaviour of firms non-price competition

8. A large number of _____ and ______ ____________ goods Perfect / Imperfect information of the market ____ entry and exit Monopolistic Competition Monopolistic competition is a market structure with the features of both ________________ and _________ ___________. perfect competition imperfect competition Features similar to perfect competition Features different from perfect competition sellers Heterogeneous buyers Free

9. Monopolistic competitors are price-________. _________ competition Monopolistic Competition Behaviour of firms searchers As the firms sell differentiated products, they can choose what ______ to set to maximise their ______. price profits Non-price

10. Q Hutchison Global Communications PCCW New World Telecom New T&T Take this challenge 1 Identify the market structure of the International Direct Dialing (IDD) services in Hong Kong. Oligopoly The market is dominated by several major sellers like:

11. Q Take this challenge 2 Suppose the costs of providing IDD services are lower due to technological progress. If PCCW lowers its price, what will be the actions of other IDD service providers? Since the market structure of IDD services is an oligopoly, the decisions made by firms will be _______________. interdependent Other firms will _____ their prices when PCCW lowers its prices. lower

12. Q ______ number of stalls in Hong Kong entry into the market is _____ as only a small amount of capital is required goods sold in different stalls are regarded as ______________ by consumers __________ information of the market Take this challenge 3 What is the market structure of newspaper stalls in Hong Kong? Explain. It is _______________________ as the features of both ___________________ and ______________________ exist: monopolistic competition perfect competition imperfect competition large easy heterogeneous imperfect