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Explore the characteristics of the market, ranging from free competition with many firms competing at the same price to monopoly, where one dominant firm controls the market and can change prices at will. Also, discover the nature of our market, which is dominated by a few producers, with demand being in between elastic and inelastic, and high market concentration.
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Counter PartsOligopoly Deep, Johanne, Sami
Nature of Our Market Between Free Competition and Monopoly
Free Competition • Characteristics: • Many firms competing • Demand is perfectly elastic • Firms are competing at the same price
Monopoly • Characteristics: • One firm that dominates the market • Demand is almost perfectly inelastic • Ability to change the price to anything
Nature of Our Market • Characteristics: • Dominated by few producers • Demand is in between elastic and inelastic • High level market concentration
Types of Oligopolies • Perfect oligopoly: Few firms produce an identical product • Imperfect oligopoly: Few firms differentiate in their products • Duopoly: Only two firms in the industry • Collusive & Non-Collusive: Joining or not joining with rivals
Nature of Our Market • Characteristics: • Product Branding: Selling differentiated product, to appear as if there are unique features • Entry Barriers: Prevents dilution of competition, maintains supernormal profits • Interdependent Decision Making: Know reactions of rivals (the happenings of a rival affect your firm) • Non-price Competition: Competitive strategies other than reducing prices
Entry Barriers • Barriers to Entry: Obstacles that keep a firm from entering the market • Very High • Huge firms able to heighten it through advertising and branding • Allows firms to make supernormal profits • Entering firms don't have scale benefits, High efficent firms left with little competitiors
Non- Price Competition • Quality and Innovation: Differentiating its product creating demand more inelastic for each product • With more differentiation, there is more control over prices • Enchancing Perceived value: Improving how consumers look at a product. Ex. packaging, design, brand image.
