1 / 13

< ============================================ 

Market Structure Continuum. No Competition. Pure Free Market. < ============================================ . Perfect Competition. MONOPOLISTIC COMPETITION. Oligopoly. Monopoly. Monopoly Market Characteristics. One Seller Unique Product—(no substitutes)

odetta
Télécharger la présentation

< ============================================ 

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Market Structure Continuum No Competition Pure Free Market <============================================ Perfect Competition MONOPOLISTIC COMPETITION Oligopoly Monopoly

  2. MonopolyMarket Characteristics • One Seller • Unique Product—(no substitutes) • Very difficult to enter/leave industry • Price Setters: great deal of price control

  3. Examples of Monopolies More Distant Past: • Standard Oil (John D. Rockefeller) • United States Steel (Andrew Carnegie) More Recent Past: • American Telephone & Telegraph (AT & T) • Microsoft

  4. Current Monopolies NATURAL MONOPOLY: a market that runs most efficiently when one firm supplies all of the output • Electric Utilities • Water for your home • Garbage collection LOCAL MONOPOLY: for various reasons there are no other competitors in a geographic area i.e. only gas station in a small town Avoid buying gas here if you can!

  5. Bottom Line: Monopolies lead to a) Higher price & lower Quantity produced b) Less variety of products

  6. Anti-Trust Laws Anti-Trust Laws, administered by the U.S. Department of Justice, can be used to • Break up a monopoly (like Standard Oil or AT & T) b) Prevent companies from merging to maintain competition (AT & T and T-Mobile?)

  7. Video clip from “Fair Fight in the Marketplace” Offender: Archer Daniels Midland Co. (segment 2) 6 min. 24 sec.

  8. U.S. Economy How close to Adam Smith’s World? No Competition Pure Free Market <============================================ Perfect Competition Monopolistic Competition OLIGOPOLY Monopoly

  9. Oligopoly Examples • Car makers • Steel industry • Aircraft manufacturing • Oil industry • Airlines • Tobacco industry • Beer industry • Soda industry • Home Improvement • Music recording industry • Textbook industry • Wireless communications industry • Aerospace industry

  10. Automobile Production Airliner Production Can you have Perfect Competition in: N0, because of Economies of Scale. Economic Activity is often MORE EFFICIENT when done on a LARGE SCALE

  11. Economies of Scale Definition: factors that cause a producer’s average cost per unit to fall as output rises

  12. Economies of Scale Example 1 unit of energy 1000 units of energy 10,000 units of energy 100,000 units of energy 1,000,000 units of energy 100 units of energy Cost of building power plant (fixed cost) $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 $10,000,000 Cost per unit of energy produced $100,000 $10,000 $1000 $100 $10 $10,000,000

More Related