Share/argue/debate with your
neighbors…
Which of the following do you prefer (if you had
to choose between the two)?
• Pepsi or Coke?
• Subway or Jimmy Johns?
• Dominos or Papa Johns pizza?
• Bing or Google?
• Apple or Android?
Market Structures:
Business Competition
Unit 3
Market Structures
• The type and amount of competition between
companies in the same industry
– Ex:
• Automotive industry
• Soft drink industry
• Athletic shoe industry
• 4 types of competition
– Perfect competition
– Monopolistic competition
– Oligopoly
– Monopoly
Monopolistic Competition
• Characteristics
– Many sellers (companies)
– No sellers dominate the market
– Products vary slightly from one seller to the next
• Example: Sit-down restaurants, gasoline
companies
Monopolistic Competition
• Companies rely on product differentiation
– Highlighting the differences between competing
products in the same industry
– Leads to a reliance on non-price competition
• Use of advertising, giveaways, or promotional
campaigns to increase demand
Pizza Restaurants: Non-Price
Competition
Papa Johns
Domino’s Pizza
Sub sandwiches: Non-price
competition
Jimmy Johns
Subway
Subs so fast you’ll freak!
Eat Fresh
(Healthy food)
Oligopoly
• A select few large sellers
dominate the industry
– Very few sellers in the market
– Examples?
– Pepsi and Coke
– Nike, Adidas, Under Armor
Oligopoly
• Creates Interdependent Behavior
– When one company makes a change (price,
product, advertising, etc), the others tend to
follow
• Examples?
– Cell phone plans
– Streaming services (Hulu, Netflix)
– Airline prices
– Can lead to a price war
• Companies compete with continual price reductions
Monopoly
• Only one seller in an industry
– Examples: no perfect example
– Types of monopolies
– Natural monopoly
• Services can be provided cheaper when there is just one
provider
– Utility companies
– Geographic monopoly
• Only one seller in a local area
• “This town ain’t big enough for the two of us” monopoly
– Government monopoly
• Government has control over an industry
– Fire fighting
– Monopolies have total control over prices
Quick Review
1. In a monopolistic competition market, who
has a dominant control over the market?
No one!
2. In an oligopoly market, what happens when
one company changes its prices?
The other companies follow
3. What type of market structure results in one
company having total control of prices?
Monopoly
Work in your groups…
List as many local examples of markets in
Columbus that fit into one of the 3 types of
market structures:
• Monopolistic Competition
• Oligopoly
• Monopoly
Add to your business plan…
If you started your business in Columbus,
IN….what type of market structure would it
enter into? A monopoly? An oligopoly? Or a
monopolistic competition? Why?