2. CERTIFICATE
THIS IS TO CERTIFY THAT
DIVYANSHI NARULA
OF CLASS XII-H, AMITY INTERNATIONAL SCHOOL, SECTOR-46, GURUGRAM HAS WORKED UNDER MY
SUPERVISION ON THE ECONOMICS PROJECT AND HAS SUCCESSFULLY COMPLETED IT TO MY TOTAL
SATISFACTION.
PRINCIPAL’S SIGNATURE ECONOMICS TEACHER
4. ACKNOWLEDGEMENT
– I would like to express my special thanks of gratitude to my teacher Ms.
Poonam Goel as well as our principal Ms. Arti Chopra who gave me the golden
opportunity to do this wonderful project on the topic MAIN MARKET FORMS
which also helped me in doing a lot of Research and I came to know about so
many new things I am really thankful to them.
– Secondly i would also like to thank my parents and friends who helped me a lot
in finalizing this project within the limited time frame.
5. OBJECTIVES
– To study how types of market forms can be effective at times and adversely
affect certain groups of indivisuals or institutions.
– To analyse several case studies and giving opinions on them.
7. WHAT IS A MONOPOLY?
– A monopoly refers to when a company and its product offerings dominate a
sector or industry. Monopolies can be considered an extreme result of free-
market capitalism in that absent any restriction or restraints, a single company
or group becomes large enough to own all or nearly all of the market (goods,
supplies, commodities, infrastructure, and assets) for a particular type of
product or service. The term monopoly is often used to describe an entity that
has total or near-total control of a market.
– • Natural monopolies can exist when there are high barriers to entry; a
company has a patent on their products, or is allowed by governments to
provide essential services.
8. – High or no barriers to entry: Competitors are not able to enter the market, and the
monopoly can easily prevent competition from developing their foothold in an
industry by acquiring the competition.
– Single seller: There is only one seller in the market, meaning the company becomes
the same as the industry it serves.
– Price maker: The company that operates the monopoly decides the price of the
product that it will sell without any competition keeping their prices in check. As a
result, monopolies can raise prices at will.
– Economies of scale: A monopoly often can produce at a lower cost than smaller
companies. Monopolies can buy huge quantities of inventory, for example, usually a
volume discount. As a result, a monopoly can lower its prices so much that smaller
competitors can't survive.
9. WHAT IS MONOPOLISTIC
COMPETITION?
– Monopolistic competition characterizes an industry in which many firms offer products or
services that are similar, but not perfect substitutes. Barriers to entry and exit in a
monopolistic competitive industry are low, and the decisions of any one firm do not directly
affect those of its competitors. Monopolistic competition is closely related to the business
strategy of brand differentiation
– Decision Making: Monopolistic competition implies that there are enough firms in the
industry that one firm's decision does not set off a chain reaction. In an oligopoly, a price cut
by one firm can set off a price war, but this is not the case for monopolistic competition.
– Pricing Power: As in a monopoly, firms in monopolistic competition are price setters or
makers, rather than price takers. However, the firms nominal ability to set their prices is
effectively offset by the fact that demand for their products is highly price elastic. In order to
actually raise their prices, the firms must be able to differentiate their product from their
competitors by increasing its quality, real or perceived.
10. – Number of firms: Say you've just moved into a new house and want to stock up on
cleaning supplies. Go to the appropriate aisle in a grocery store, and you'll see that
any given item—dish soap, hand soap, laundry detergent, surface disinfectant, toilet
bowl cleaner, etc.—is available in a number of varieties. For each purchase you need
to make, perhaps five or six firms will be competing for your business.
– Economic Profit: In the short run, firms can make excess economic profits. However,
because barriers to entry are low, other firms have an incentive to enter the market,
increasing the competition, until overall economic profit is zero. Note that economic
profits are not the same as accounting profits; a firm that posts a positive net
income can have zero economic profit, since the latter incorporates opportunity
costs.
11. WHAT IS OLIGOPOLY?
– Oligopoly is a market structure with a small number of firms, none of which can keep the
others from having significant influence. The concentration ratio measures the market share
of the largest firms. A monopoly is one firm, duopoly is two firms and oligopoly is two or more
firms. There is no precise upper limit to the number of firms in an oligopoly, but the number
must be low enough that the actions of one firm significantly influence the others.
– Oligopolies in history include steel manufacturers, oil companies, rail roads, tire
manufacturing, grocery store chains, and wireless carriers. The economic and legal concern is
that an oligopoly can block new entrants, slow innovation, and increase prices, all of which
harm consumers. Firms in an oligopoly set prices, whether collectively – in a cartel – or under
the leadership of one firm, rather than taking prices from the market. Profit margins are thus
higher than they would be in a more competitive market.
– • Government policy can discourage or encourage oligopolistic behavior, and firms in
mixed economies often seek government blessing for ways to limit competition.
12. – Monopoly Power: There is a clement of monopoly power in oligopoly. Since
there are only a few firms and each firm has a large share of the market. In its
share of the market, it controls the price and output. Thus an oligopoly has
some monopoly power.
– Large number of consumers: In this market, there are large numbers of
consumers to demand the product.
– Interdependence among firms: In oligopoly market, each firm treats the other
as its rival firm. It is for this reason that each firm while determining price of its
product, takes into account the reaction of the other firms to its own action.
13. MONOPOLY MARKET
EFFECTS ON CONSUMERS
DISADVANTAGESTO THE COMMON PEOPLE
Poor level of service.
Lack of competition may lead to low quality and out dated goods and services.
No consumer sovereignty. A monopoly market is best known for consumer
exploitation. There are indeed no competing products and as a result the
consumer gets a raw deal in terms of quantity, quality and pricing.
Consumers may be charged high prices for low quality of goods and services.
14. ADVANTAGES TO THE COMMON PEOPLE
Monopolies may use price discrimination which benefits the economically
weaker sections of the society.
15. MONOPOLISTIC COMPETITION
MARKET EFFECT ON
CONSUMERS
ADVANTAGES
Consumers get the best possible prices, quantity, and quality of goods and services
There’s a boost to innovation.
Large international companies create a lot of jobs for the global economy.
Companies can provide consumers with better consistency when they exist
internationally.
An advantage of monopolistic competition is that it enhances a firm's ability to improve
a product's quality through its brand.
16. OLIGOPOLY MARKET
EFFECTS ON CONSUMERS
ADVANTAGES
– An oligopoly can adopt a competitive strategy.
– Oligopolies can offer more information to their consumers.
– It allows for more product refinement to occur.
– It can bring price stability to the market.
17. DISADVANTAGES
– Customers must put up with poor service because there are no other choices.
– Companies can add fees and charges because there is no competition.
– It creates the appearance of choice without really giving you one.
– Higher concentration levels reduce consumer choice.
– Collusion is possible in this structure to further reduce competition.
– It can lead to decision-making bias and irrational behavior.
19. INDIAN RAILWAYS
– Indian railways is a publicly owned company controlled by the govt. of india, via
the ministry of railways.
– Each of the sixteen zones is headed by general manager (GM).
– The zones are further divided into divisions under the control of divisional
railways manager (DRM). the divisional officers of engineering, mechanical,
electrical, signal and telecommunication accounts, personnel, operating,
commercial and safety branches.
20. Why IR is considered as a
MONOPOLY?
Single seller, many buyers
No substitutes (not even close)
Closed entry
Price maker
Price discrimination
Senior citizen
Students
Army officials, etc.
21. OUR SOULTION FOR MONOPOLY
IN INDIAN RAILWAYS
– Privatise all the companies that manufacture rolling stock and build rail
infrastructure, also allow FDI in these areas.
– The ownership of railway infrastructure must be govt. owned. The design,
operation, management and expansion of the railway network and
infrastructure must be with a regulatory body like that for aviation.
– The ministry of railway must be merged into the industry of civil aviation,
surface transport, national highways an others to form a ministry of transport.
This will formulate critical legislation regarding safety regulations,
customer rights and welfare, standardization, quality services, etc.
22. – This train operating company called Indian railways shall compete with private train operating
companies which will also be allowed to run trains using the same network on equal terms.
– Divide the railway network into 5-12 trunk routes and others. Let the ministry of transport
own these routes and transfer the rest to the respective states. Let the central establishment
work mostly on trunk routes and the state govt. expand the local network, light rail systems
and integrate them with the trunk routes.
This will give better coverage and utilization
– Any proposed routes, expansions or modernizations must be cleared by the national rail
governing body to ensure it meets the national rail standards, quality, safety, etc. and is
compatible with the existing trunk routes.
24. PRICE AND NON PRICE
COMPETITION IN GYM MARKET
– The UK gym / health club industry generates > £2 billion of revenues annually
with over 1500 businesses employing nearly 40,000 people.
– Gyms and fitness centres are concentrated in urban areas where high
population density makes businesses more viable.
– The market position leading mid-market gyms has come under pressure in
recent years. Consumers are switching towards budget gyms, which donot
require long-time contracts and charge less because they only offer basic
services.
25. • Pay as you go
• Basic equipment
• Often out of town
• Many open 24 hours
• Dry facilites only- gym,
classes
• Membership
subscriptions
• Wet (spa, pool) and
dry facilities.
• Car parking
• Restaurants
• Tailored instruction
26. OLIGOPOLY IN AUTOMOBILE
INDUSTRY
– THE INDIAN CAR INDUSTRY OLIGOPOLY
– The Hindustan motors- the first Indian car company to start production in india-
founded in 1942 by Mr BM Birla; embassador- The flagship car.
– Establishment of other car manufacturing companies like Premier Automobiles
(1944); Premier Padmini – The flagship car, now also used for cab services.
27. REASONS FOR OLIGOPOLY
STRUCTURE
– In 1947, govt. of india and private sector launched efforts to create automotive
components manufacturing industry.
– Slow growth in 1950s and 1960s; Reasons- Liscence Raj, Nationaliszation,
socialistic approach, MRTP Act.
– The industries ( development and regulation ) Act passes in 1951 to implement
Industrial policy resolution of 1948- one of the reasons for closed markets.
– The act empowerd govt. to prescribe prices, methods, volume of production,
channels of distribution.
28. IMPACT OF OILIGOPOLY
STRUCTURE
– Impact on automobile industry- growth very slow because of low demand and
low economic status of the country.
– Govt restrictions provided no motivation or incentive for firms to do
technological upgradation.
– Supply was low and there wasn’t many competitors.
– Impact on consumers- Consumers did not have many choices; the demand was
fairly low as cars were still a luxury and availability of same models.
29. CAUSES OF
TRASFORMATION
– Sanjay Gandhi owned Maruti technical services limited which was liquidated.
– After his death, Indira Gandhi govt. collaborated with Suzuki motors, a Japanese
firm, for collaboration- formation of Maruti Udyog ltd. And renamed later
Maruti Suzuki in 2007
30. EFFECTS OF
TRANSFORMATION
– New firms, including foreign players, entered with modern engineering,
efficient processes and modern shop-floor layouts.
– Indian automobile industry grew at 14.31% per anum in 1991 era compared to
8.56% per anum during 1985-91.
– Delicencing of sector attracted many major global automobile (GM, FORD,
HONDA, HYUNDAI, etc.) to start assembly in India.
