Preview

market structures

Powerful Essays
Open Document
Open Document
1815 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
market structures
International MSc in Business Administration

Managerial Economics
Market Structures Part 1

Carlos Almeida Andrade
2013/14

Managerial Economics: Market Structures Part 1

Market Structures
Firms may face different environments in terms of market structure:
• number of firms
• relative size of those firms,
• their influence on market conditions (market power)
• different technology and costs gy • information
• demand conditions, etc.
These differences have an impact on the choices made by firms. According to different conditions, we will look at the following market structures:
• Perfect competition
• Monopoly
• Monopolistic competition
• Oligopoly
Managerial Economics / Carlos Almeida Andrade

Carlos Almeida Andrade
2013/14

Managerial Economics: Market Structures Part 1

Perfect Competition
Main conditions for a perfect competitive market:

•Many buyers and sellers in the market, each one “
“small” relative to the market. Each
”
firm is a price taker.
•The product of each firm is homogeneous
The
homogeneous.
•Buyers and sellers have perfect information.
•There are no t
Th
transaction costs. ti t
•There is free entry into and exit from the market.

Example of a market close to perfect competition: agricultural market
Carlos Almeida Andrade
2013/14
Managerial Economics / Carlos Almeida Andrade

Managerial Economics: Market Structures Part 1

Perfect Competition
P

Market

S

Pe

P

Firm

Df=Pe

D
Qf

In
I a competitive market, the price is d t titi k t th i i determined b th i t i d by the intersection of supply and ti f l d demand. An individual firm does not have any control over the formation of this price. It takes the price as given. Every quantity the firm supplies can/will be sold at price Pe. If the firm charged a higher p g g price, it would not sell anything. The demand curve faced by
,
y g y
Carlos Almeida Andrade the firm will be perfectly elastic


References: Consumer Choice Baye, M.R. and J.Prince, “Managerial Economics and Business Strategy”, Global Edition (8th) 2013, McGraw-Hill Carlos Almeida Andrade Chapter 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets 2013/14
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Better Essays

    Maximizing Profits in Market Structures Paper
    • 1137 Words
    • 5 Pages

    Maximizing Profits in Market Structures Paper

    The structure of a market is defined by the number of firms that are competing in that market, along with factors such as: the ways in which these firms are alike or different, and the obstacles that exist in any new firms entering that market. In this report I will discuss Competitive Markets, Monopolies, and Oligopolies. I will point out what role each of the market structure play in the economy. This report will list the characteristics of each market structure. I will share how the price is determined in each market structure in terms of maximizing profits. This report will share how the output is determined in each market structure in terms of maximizing profits. I will share what the barriers are to the entries.…

    • 1137 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    ECO 365 week 4 Differentiating Between Market structures
    • 1201 Words
    • 4 Pages

    ECO 365 week 4 Differentiating Between Market structures

    A monopoly is a situation in which there is a single producer or seller of a product for which there are not close substitutes. The most common example of a natural monopoly would be an Electric (power) company. Power companies are characterized by very large costs for their infrastructure making it inefficient to have more than a single firm in a region because of the high cost of duplicating facilities needed to (Colander, 2013).…

    • 1201 Words
    • 4 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Economics Chapter 7: Market Structures Study Guide with Answers
    • 1214 Words
    • 5 Pages

    Economics Chapter 7: Market Structures Study Guide with Answers

    A government monopoly is a monopoly based on ownership or control of a manufacturing method or process.…

    • 1214 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Organization and Market Structure
    • 508 Words
    • 3 Pages

    Organization and Market Structure

    You will apply important microeconomics concepts toward the competitive strategies of the Kudler Fine Food Virtual Organization that affect its long-term profitability. You will evaluate the differences between market structures and review the organization’s strategic plan, marketing overview, market surveys, and other material to evaluate the organization’s competitiveness in the marketplace, including its customers’ views. In the process, you will identify the market structure that you believe best applies to this organization, and assess how the market structure positively and negatively affects the firm’s long-term profitability.…

    • 508 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Finished Section 1 Study Questions
    • 451 Words
    • 2 Pages

    Finished Section 1 Study Questions

    The price of a product is determined by the supply of and demand for that product.…

    • 451 Words
    • 2 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Beo370 Week 1 Business Economics Assignment
    • 2528 Words
    • 11 Pages

    Beo370 Week 1 Business Economics Assignment

    BUSINESS ECONOMICS BEO 6600 Associate Professor Sarath Divisekera Topic 1: Introduction Associate Professor Sarath Divisekera      Office: FS1022, City Flinders Campus Tel. Ext: 1071 email: sarath.divisekera@vu.edu.au Important: if you wish to communicate with email, please make sure that you use your official (student email not your private emails). Office hours: Please check my timetable (on the office door) –1/03/2014 –Business Economics © Dr Sarath Divisekera Teaching Assistant     Ms. Victoria Gonzalez Office: 1334, Tel Ext.: 9919 1019 email: victoria.Gonzalez@vu.edu.au Consultation by Appointment.…

    • 2528 Words
    • 11 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Week 4 Differentiating Between Market Structures
    • 386 Words
    • 3 Pages

    Week 4 Differentiating Between Market Structures

    Spendy but indispensable: Breaking down the full $650 cost of the iPhone 5 (2013, July). Digital…

    • 386 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    ECON103 D100 Midterm1A Summer2013
    • 1045 Words
    • 6 Pages

    ECON103 D100 Midterm1A Summer2013

    demand for this product is 1.5. If this firm charges price 5.20 it will sell Q =…

    • 1045 Words
    • 6 Pages
    Good Essays
    Read More
  • Good Essays

    Managerial Economics Chapter 9
    • 1632 Words
    • 7 Pages

    Managerial Economics Chapter 9

    Many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market.…

    • 1632 Words
    • 7 Pages
    Good Essays
    Read More
  • Good Essays

    Maximizing Profits in Market Structures
    • 1081 Words
    • 5 Pages

    Maximizing Profits in Market Structures

    Competitive markets, monopolies, and oligopolies play a big role in the economy. We will be discussing the characteristics, price determination, output determination, barriers to entry, and the role in economy of each market structure.…

    • 1081 Words
    • 5 Pages
    Good Essays
    Read More
  • Better Essays

    Differentiating Between Market Structures Research Paper
    • 1097 Words
    • 5 Pages

    Differentiating Between Market Structures Research Paper

    Market structure is the state of the market with respect to its competition. There are several different market structures such as perfect competition, monopolies, and oligopoly. An industry consists of all firms making similar or identical products. Economists assume that there are a number of different buyers and sellers in the marketplace (Heakal, 2014). In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers of a good or service, the producer(s) can control price, meaning that a consumer does not have choice, cannot maximize his or her total utility and has have very little influence over the price of goods. This will lead to a competition in the market, which allows price to change in response to changes in supply and demand. For almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead (Heakal, 2014). According to the Fortune Global 500 list Walmart is the biggest private employer in the world with over two million employees. It remains a family owned business controlled by the Walton family, who own over 50 percent of Walmart.…

    • 1097 Words
    • 5 Pages
    Better Essays
    Read More
  • Satisfactory Essays

    Differentiating Between Market Structures Paper
    • 241 Words
    • 1 Page

    Differentiating Between Market Structures Paper

    Prepare a table that compares and contrasts the various elements of four different market structures.…

    • 241 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Better Essays

    Market Structures
    • 2025 Words
    • 9 Pages

    Market Structures

    According to McConnell and Brue (2004), a monopoly occurs when a single firm is the sole producer of a product for which no close substitutes exist. Since the United States Postal Service (USPS, 2008) has no close substitutes, competition does not exist. The Postal Service’s universal service obligation (USO) is broadly outlined in multiple statutes and encompasses multiple dimensions: geographic scope, range of products, access to services and facilities, delivery frequency, affordable and uniform pricing, service quality, and security of the mail (USPS 2008). When monopolists are not protected by law from competition, the companies may have to keep their prices low in order to keep competition from entering the market. However, USPS is considered a pure monopoly and barriers of entry are in place. USPS is the only federal operating system that sends and delivers mail. USPS has competition in the market with services such as package delivery. Now, the agency has to compete with major companies such as UPS and FedEx. United States Postal Services depends on operation funding from postage and fees. Comparatively, the Postal Service provides a higher level of service and does so at low, affordable prices (USPS, 2008).…

    • 2025 Words
    • 9 Pages
    Better Essays
    Read More
  • Good Essays

    Market Structures
    • 1148 Words
    • 5 Pages

    Market Structures

    We will identify the market structure of a Cosmetologist also known as a hairdresser. Also how a Cosmetologist differentiates from other alternatives and the competitive strategies that might be used by the organization to maximize profits over the long run.…

    • 1148 Words
    • 5 Pages
    Good Essays
    Read More
  • Better Essays

    Differentiating Between Market Structures
    • 1590 Words
    • 7 Pages

    Differentiating Between Market Structures

    Market structure is the physical characteristics of the market within which companies react. This means that there are different kinds of market structure based on how companies work together within a particular industry. Location and product have the most to do with determining the market structure. There are four defined market types. The first market structure is called the perfectly competitive market. The second market is called a monopoly market structure. The third market is called monopolistic competition market structure. The final market is called oligopoly market structure. Each market structure is different and both benefits and disadvantages to businesses.…

    • 1590 Words
    • 7 Pages
    Better Essays
    Read More

Related Topics