The document presents information on competition in the New York Stock Market. It discusses how the NYSE operates as a perfectly competitive market with a large number of buyers and sellers, homogeneous stocks, and perfect information. However, it also notes that in reality stock markets favor high-speed traders and limit information access, making competition imperfect. The stock market is thus an example of monopolistic competition rather than perfect competition due to each company being a unique supplier of its stock.

1. A CASE BASED
PRESENTATION
ON
COMPETITION IN NEWYORK
STOCK MARKET

2. PRESENTED BY:-
 ZAHID MEHRAJ
 Lovely professional university
 BBA-MBA

3. WHAT IS A STOCK
MARKET?
 A Stock market is a physical
place, sometimes known as
stock exchange, where brokers
gather to buy and sell stocks
and other securities.
 The term is also used broadly to
include electronic trading that
takes place over computer and
telephone lines.

4. NEWYORK STOCK
EXCHANGE : NYSE
 NYSE is a corporation which is managed and
run by a group of directors who are responsible
for overseeing their members activity, setting of
policies and listening to the securities to be
traded.
 NYSE i.e.; Newyork stock exchange situation
prevails as a perfectly competitive market
situation.

5. WHAT IS MEAN BY
PERFECT COMPETITION?
 It’s a market structure which have a large
number of buyers and a large number of sellers.
 It means, Perfect competition exists
when there is a very large number of small
companies trading in the same or very similar
commodities or services, and none of whom
can affect the price by increasing output or
restricting it.

6. NYSE- under perfect
competition:-
q Presence of large number of buyers
and sellers of shares.
q just like perfect competition situation,
the shares prices are determined by
market without any influence from
individual suppliers and consumers.
q since the product sold by perfectly

7. q In NYSE all stocks are more or less
homogeneous.
q NYSE under PERFECT COMPETITION has
ideal maker structure.
q perfect knowledge of stock and shares
among the sellers and buyers.

8. q there is very much independence of
firm actions.
q In NYSE individual buyers and sellers
of the stock, have an insignificant
effect of price like that of perfect
competition

9. THE CLOCK TRADING
BACKGROUND OF
CURRENCY DEALING OF
NYSE:-
 The NYSE
 market exchange is the market where by
buying and selling of world currency for their
own takes place. There is a 24-HRS. trading, 5
days of a week( about 9 pm to 10 pm)
 The trade volume of NYSE which trades only 25
billion dollar per day .

10.  over ninety percent of trading in
currencies around the world is speculative
rather than the buying and selling of
currencies to enable people and firms to
conduct business in the real economy.

11. Example to Show Stock
market is close to a
perfectly competitive
market:-
 The sale of 1$ billion worth of stocks by
IBM or any other large corporation will
certainly affect the price of its stocks.
Furthermore, stocks prices can
sometimes stock prices becomes
grossly overvalued. i.e.; we have a
bubble market.

12.  In perfect competition, the demand and
supply are = 1, i.e.; Ed = 1:
 a perfectly competitive firm faces a
horizontal or perfectly elastic demand
curve, such as the one displayed in the
exhibit to the right.

14. SHORT RUN EQUILIBRIUM:-
 In the short run a perfectly competitive
firm may earn supernormal profit, or
normal profit or can incur losses,
depending on the positions of the short
run cost curves.

15. EQUILIBRIUM PRICE:-

16. CASE OF SUPERNORMAL
PROFIT:-

17. CASE OF NORMAL
PROFITS:-
 Since no firms earn super
normal profits in the short run;
some of them also earn normal
profits.

19. CASE OF LOSSES:-

20. LONG RUN EQUILIBRIUM:-
 Mostly in the long run,
perfectly competitive firms
earn only normal profits.

22. Why stock market is
good example for
perfect competition?
 In theory, a stock market is perfect competition.
However, in reality, it is actually an example of
very poor competition. Both in laws and in actual
construction, stock markets heavily favor those
able to purchase super-high-speed computers
(and host them in the exchange itself), and also
tend to restrict information to a privileged few
while denying it to the majority of users. The
consequence is that a stock market actually is
very imperfect competition, heavily favoring the
established members of the exchange over the
ordinary exchange trader.

23.  It isn't. As a technical term in Economics,
"perfect competition" is the (ideal or
theoretical) market structure characterized
by a large number of price-taking producers
with identical U-shaped cost curves (the
minimum of the firm cost curve occurring at
an output small in comparison with market
demand), who face no barriers to entry,
producing a uniform product and selling it to
a large number of price-taking consumers,
without collusion or price-discrimination.

24. The stock market is characterized
by non-uniform commodities
(shares in different companies)
each with a monopoly supplier. If
anything it's an example of
monopolistic competition, not
perfect competition.

25. HOW THE DECLINE IN
ONE MARKET AFFECTS
THE OTHER MAKET IN THE
WORLD:- When the Newyork Stock Market
exchange collapse in October 1987
caused sharp declines in stock markets
around the world. And when again 10
years later in 1997, the collapse of
southeast Asia led to a sharp decline in
the Newyork stock market of other
nations.

26. q A perfectly competitive is made up of
a large no. of small independent firms
each selling identical product to a
large no. of buyers.
q The firm demand curve is perfectly
price elastic because any firm that
raises its price sees demand fall to zero
as consumers, switch to other
producers offering identical product.

27. Perfect knowledge – consumers
have readily available information
about prices and products from
competing suppliers and can
access this at zero cost – in other
words, there are few transactions
costs involved in searching for the
required information about prices.