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Counter Parts Oligopoly
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Counter Parts Oligopoly

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  • Deep - Nature of Market/Free Competition/Monopoly/Intro to Oligopoly   Sami - Determining Costs/Revenue/Profits   Jo - Introduction and Conclusion
  • Demand is perfectly elastic: If there is a firm with a different price, the consumers will got that firm because of the perfectly elastic tendencies of the demand
  • 2.  a large % of the market is taken up by the leading firms
  • 3. ANy action taken by one major firm will have immedite repercussion on the others. Because they dont have total control of the market but large enough to affect output and price.
  • 3. ANy action taken by one major firm will have immedite repercussion on the others. Because they dont have total control of the market but large enough to affect output and price.
  • To maximize profit, go to point MR=MC   Price determined on demand curve   Unit cost on the total cost curve   Equate price and marginal cost   (Mutual interdependence) Firm's profit depends on price and sales of rivals
  • 1. enable them to earn normal profits and result in lesser exploitation of customers   2. results in better products, better customer service and more innovation in terms of customer satisfaction     3. Supports high entry barriers   4. increaed competitiveness by joining of two or more companies. Enjoy economic benefits.    
  • 3. Agreeing on quotas will imit supply and drive up the market price. There are strict regulations to this. Since it is illegal, it doesnt last too long as firms will not be forced to follow. All is needed for one firm to sell below or above the set price for it to break down.
  • 3. Agreeing on quotas will imit supply and drive up the market price. There are strict regulations to this. Since it is illegal, it doesnt last too long as firms will not be forced to follow. All is needed for one firm to sell below or above the set price for it to break down.
  • Transcript

    • 1. Counter Parts Oligopoly Deep, Johanne, Sami
    • 2. Nature of Our Market     Between  Free Competition and Monopoly     
    • 3. Free Competition
      • Characteristics:
      •  
        • Many firms competing
      •  
        • Demand is perfectly elastic 
      •  
        • Firms are competing at the same price
      •  
    • 4. Free Competition
    • 5. Free Competition
    • 6. Free Competition
    • 7. Free Competition
    • 8. Free Competition
    • 9. Free Competition
    • 10. Free Competition
    • 11. Free Competition
    • 12. Free Competition
    • 13. Monopoly
      • Characteristics:
      •  
        • One firm that dominates the market
      •  
        • Demand is almost perfectly inelastic
      •  
        • Ability to change the price to anything
    • 14. Monopoly
    • 15. Monopoly
    • 16. Monopoly
    • 17. Monopoly
    • 18. Monopoly
    • 19. Monopoly
    • 20. Monopoly
    • 21. Monopoly
    • 22. Monopoly
    • 23. Nature of Our Market
      •  
      •  
      • Characteristics:
      •  
        • Dominated by few producers
      •  
        • Demand is in between elastic and inelastic
      •  
        • High level market concentration
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    • 24. Oligopoly
    • 25. Oligopoly
    • 26. Oligpoly
    • 27. Oligopoly
    • 28. Oligopoly
    • 29. Oligopoly
    • 30. Oligopoly
    • 31. Oligopoly
    • 32. Oligopoly
    • 33. Oligopoly
    • 34. 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
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    • 35. 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
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    • 36. Entry Barriers
        • Barriers to Entry: Obstacles that keep a firm from entering the market
      •  
        • Very High
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        •   Huge firms able to heighten it through advertising and branding
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        • Allows firms to make supernormal profits
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        • Entering firms don't have scale benefits, High efficent firms left with little competitiors
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    • 37. 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.
      •  
    • 38. Kinked Demand Curve
    • 39. Kinked Demand Curve
    • 40. Kinked Demand Curve
    • 41. Kinked Demand Curve
    • 42. Kinked Demand Curve
    • 43. Kinked Demand Curve
    • 44. Kinked Demand Curve
    • 45. Kinked Demand Curve
    • 46. Kinked Demand Curve
    • 47. Kinked Demand Curve
    • 48. Kinked Demand Curve
    • 49. Kinked Demand Curve
    • 50. Kinked Demand Curve
    • 51. Kinked Demand Curve
    • 52. Kinked Demand Curve
      •  
        • Demand curve - elastic and inelastic
      •  
        • Firms do not move from price to price
      •  
        • Increase in price, no one follows - fall in revenue
      •  
        • Reduce in price, everyone follows - fall in revenue
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        • Two MR curves are needed for two demand curves
      •  
        • MC Curves in inelastic demand - no price change
      •  
        • MC Curves in elastic demand - P & Q changes.
    • 53. Determining Costs
        • Find where MR=MC
      •  
        • Go straight to the y-axis (Price)
      •  
        • Cost of product determined
    • 54. Determining Costs
    • 55. Determining Revenue
        • Revenue depends on price and elasticity of demand
      •  
        • Bigger market = more revenue
      •  
        • Quantity x Price at MR=MC
      •  
        • (Kinked Curve) Change in price decreases revenue
    • 56. Determining Profit
        • To maximize profit, go to point MR=MC
      •  
        • Price determined on demand curve
      •  
        • Unit cost on the total cost curve
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        • Equate price and marginal cost
      •  
        • (Mutual interdependence) Firm's profit depends on price and sales of rivals
    • 57. Positives
        • Price set by Markets
      •  
        • Firms are in competition with each other
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        • Scale Benefits
      •  
        • Ability of Merging
    • 58. Negatives
        • High costs =  Lowering potential output
      •  
        • Interdependant on each firm
      •  
        • Collusion - Usually setting Prices
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    • 59. Why Are We Succesful?
        • Products highly demanded
        • Ability to control output and price
        • High Entry Barriers - Lower Competition
        • Few Firms - Influential 
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    • 60. Summary
        • Between free competition and monopoly
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        • Few large firms
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        • Large barriers for entry
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        • More on non-price, interdependant on other firms
      •  
        • Theory - use of the kinked curve (once price is set)
      •  
        • An inefficent market structure
      •