Competition and
Market Structures
How well do you remember the four
market structures? Write them out
with two example.
Go Back Over Your Notes!!
What is a Market
Structure?


The nature and degree of
competition among firms in the
same industry
We classify 4 Market Structures by
asking questions like:
We classify Market Structures by
asking:
1.
2.
3.
4.
5.
How much control over price does
each firm have?
How many firms are competing in the
market?
How large/what size are each of the
firms?
What are the characteristics of the
products in each market?
How easy is it for new firms to enter
the market?
Market Structures

Perfect Competition

Monopolistic Competition

Oligopoly

Monopoly
MONOPOLY
Warm Up:
Why did the U.S. gov’t
make monopolies illegal??
MARKET STRUCTURES:
Perfect Competition
Meets 5 Conditions:
1.
Large number of buyers and sellers
2.
Buyers and sellers deal in identical
products
3.
Buyers and sellers act independently
4.
Buyers and sellers are well-informed
5.
Buyers and sellers are free to enter
into, conduct, or get out of
business
Imperfect Competitionlacks 1 or more of the 5 conditions
1.
Monopolistic Competition
2. Oligopoly
3. Monopoly
Monopolistic Competition
Has every condition except identical
products!
These Firms can monopolize a small part
of the market by:
1.
Product Differentiation – make their
product seem special through ads
2. Non-price Competition - use of
advertisements, giveaways, promotions
to get your business
Oligopoly
Where few very large sellers
dominate the industry
Any firm within this market
structure can cause a change
in output, sales, or prices
A few control 2/3s of the
industry
Must use Interdependent
Behavior

Collusion:
•A formal agreement to set prices or limit
output, acting as one company.

Price Wars:
•When one firm lowers prices other firms
will follow in a series of price cuts that
result in unusually low prices
Monopoly
Market Structure
with only
1 seller of a
particular product
The federal
government has
outlawed
monopolies for
over 100 years.
Trustbusting
T.R. and the
Sherman AntiTrust Act
started it off!
Natural Monopoly
-A market situation where costs of
production are minimized by having a
single firm produce the product
What are the other
natural monopolies in
Western New York?
Geographic Monopoly
A monopoly based on
absence of other sellers
LUCK OF LOCATION!!!
Example: Thruway gas
stations!!
Technological
Monopoly
Based on the ownership of a method of
production, scientific advance, method
or process
•Patents - granted by government, exclusive right to
manufacture, use, or sell any new and useful
Invention
•Copyrights - given to art or literary work and is
exclusive right of artist to publish, sell, or reproduce
for their lifetime plus 70 years
Government Monopoly
Government owns and
operates a monopoly at
National, State and Local levels
What other services
does govt provide us
that are paid for
with our taxes?
HOMEWORK 

Grab your textbook and you have the
remainder of the period to work on
this assignment. It will be collected
for a grade tomorrow!!
Top Ten Most Common Words
WRITTEN in the U.S.
10. For
9. It
8. Was
7. Is
6. To
5. In
4. A
3. And
2. Of
1. The
It’s your time to shine
with design!
Design advertisement posters for the
market structures your group has
been assigned. Your posters must
have the following…
*A Slogan
*Picture of the Product or Service
*Company Name
Please: DO NOT write what Market Structure it is!
Pop Quiz Time!!
1.
2.
3.
4.
Name three products that would fall
in the monopolistic competition
market structure.
What makes an oligopoly, an
oligopoly?
What are two different industries
that fall in oligopoly?
Name three legal monopolies.
Pop Quiz
5. What is product differentiation?
6. What is collusion?
7. How do price wars help consumers?
8. What are three perfect competitive
firms?
9. What makes perfect competition
perfect?
10. Why are most monopolies illegal?
Answers:
1.
2.
3.
4.
1 pt. each: shampoo, cereal, soap,
hair spray, soup, computer games.
1 pt.: a few firms; 1 pt.: 2/3’s
industry.
1 pt. each: soda, gelatin, fast food,
gas manufacture, local grocery
markets, etc.
1 pt. each: Nat’l Fuel, Nat’l Grid,
Books, Songs, Scripts, ©
Answers:
5.
6.
7.
1 pt.: advertising to make g&s
seem unique although not really;
make it seem special.
1 pt.: When firms work together to
limit production or raise prices
1 pt: When firms compete and keep
lowering prices!!
Answers:
8.
9.
10.
1 pt each: any farm products:
apple, orange, beef, milk, etc.
2 pts: many firms that sell identical
products
1 pt: too much power, price
gouging, etc.
What happens when the
market fails??
HOMEWORK:
Create a 4 – Square for each
of the four market failures