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CIA 4U0

CIA 4U0. Time to refresh “Oly” = “Seller”, as in duopoly, monopoly and triopoly “Ony” = “Buyer”, as in Oligopsony, Monopsony etc. . Mr.T’s Spectrum of Markets. When we look at markets, we can categorize them according to (a) type of market and (b) characteristics of each market. CIA 4U0.

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CIA 4U0

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  1. CIA 4U0 • Time to refresh • “Oly” = “Seller”, as in duopoly, monopoly and triopoly • “Ony” = “Buyer”, as in Oligopsony, Monopsony etc. Mr.T’s Spectrum of Markets

  2. When we look at markets, we can categorize them according to (a) type of market and (b) characteristics of each market. CIA 4U0 SPECTRUM OF MARKETS

  3. 1. Pure Competition 2. Monopolistic Competition 3. Oligopoly (Homogenous) 4. Oligopoly (Differentiated) 5. Pure Monopoly CIA 4U0 TYPES OF MARKETS

  4. 1. Number of producers and type of product (NPTP) 2. Conditions of entry into the industry (CEI) 3. Influence over price (IP) 4. Examples of each type of market (e.g.) CIA 4U0 CHARACTERISTICS OF MARKETS

  5. NPTP: Many sellers, identical product CEI: Easy to enter into the industry IP: No control over price E.g: Stock Market, certain agricultural markets CIA 4U0 (A) PURE COMPETITION

  6. 1. NPTP: Many sellers, some product distinction 2. CEI: Easy to enter into the industry 3. IP: Some control over price 4. E.G: retail trade, clothing , many service industries CIA 4U0 (B) MONOPOLISTIC COMPETITION

  7. 1. NPTP: Few sellers, some product distinction 2. CEI: Difficult to enter the industry 3. IP: Limited by independence of firms, some control over price 4. E.G: Steel, aluminum, pulp, cement CIA 4U0 ( C) OLIGOPOLY (HOMOGENOUS)

  8. 1. NPTP: Few sellers, much product distinction 2. CEI: Difficult to enter the industry 3. IP: Limited by interdependence of firms - a “price searcher” 4. E.G: Automobiles, tires, breakfast cereals, soap CIA 4U0 (D) OLIGOPOLY (DIFFERENTIATED)

  9. 1. NPTP: One seller, no product substitutes 2. CEI: Very dificult or impossible to enter the industry 3. IP: Considerable control over price - a “price maker” E.G: Electricity, gas, water, urban transit systems CIA 4U0 (E) PURE MONOPOLY

  10. Other types of markets • 1. Monopsony – One buyer, many sellers; this situation puts the power in the hands of the buyer who can purchase in bulk, obtain discounts and sell cheap to consumers (eg: WalMart, Target) • 2. Duopoly – two sellers, many buyers (eg: Pepsi and Coke; foremerly blockbusters and rogers video) • 3. Duopsony – two buyers, many sellers • 4. Triopoly – three sellers, many buyers (eg: WalMart, K Mart, Target in U.S.)

  11. Other types of markets • 5. Triopsony – three buyers many sellers • 6. Vertical Monopoly – one seller, many buyers; achieves market domination via control of production, distribution, merchandising, wholesaling and retailing (eg: Wal Mart, DeBeers – diamonds) AKA – “vertical integration”. • 7. Horizontal Monopoly – one seller, many buyers; achieves market domination via buying out other companies, technologies, physical areas etc (eg: Apple, Microsoft). AKA – “horizontal integration”.

  12. CIA 4U0 Believe it or not, Dr.Evil ran a global monopoly on “evil”!!

  13. 1. 2 X ENR: Any global economic stories 2. As a prelude to our Unit on Taxation, pose these questions to your Mom and Dad: (A) Do you believe your personal income taxes are too high and (B) Why? CIA 4U0 TONIGHT’S HOMEWORK – Wednesday March 28, 2012

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