Market structure identifies how competitive a market is based on factors like the number of firms, degree of product differentiation, barriers to entry, and firms' pricing power. Markets range from perfect competition, where many small firms have no pricing power and entry is easy, to monopoly, where a single firm controls the entire market. Between these extremes are monopolistic competition, oligopoly, and duopoly, where firms have some degree of pricing power and influence over each other. The model used depends on the characteristics of the specific industry.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It describes the key characteristics of each structure such as the number and size of firms, level of control over price, barriers to entry/exit, product homogeneity, and profit levels. More competitive structures have many small firms, undifferentiated products, free entry/exit while less competitive structures have few dominant firms, differentiated products, and high barriers to entry.
The document discusses market structure and different types of market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It provides characteristics of each market structure type and diagrams to illustrate the demand, cost, output, and profit relationships under each structure. Market structure is determined by the number of firms, degree of product differentiation, barriers to entry/exit, and firms' control over pricing and output levels. The degree of competition decreases from perfect competition to monopoly.
The document discusses different market structures, including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure, such as the number and size of firms, levels of entry and exit barriers, and firms' control over price. Diagrams are presented to illustrate the profit-maximizing output level for firms under perfect competition and monopolistic competition in both the short-run and long-run. A variety of industries like restaurants and plumbers are provided as examples of monopolistic competition.
A2 Evaluation Question on SupermarketsEton College
The major factors affecting the profitability of UK food retailers are:
1. Labor costs, specifically wages and productivity, as well as store rents which can vary between town center and out-of-town locations.
2. Supply chain costs such as transport as well as prices charged by food and non-food suppliers which retailers try to negotiate down.
3. Demand-side factors including competition from discounters like Lidl and Aldi, economic conditions impacting consumer confidence and incomes, and pricing strategies around price discrimination and own-label versus premium products.
4. Market power from oligopolistic competition and large buying power provides pricing power and economies of scale help to reduce unit costs and boost
This document discusses the concept of price discrimination, which involves a firm charging different prices to different consumers for the same good or service. It provides definitions and key conditions for price discrimination, including that the firm must have some control over prices. It also gives examples of different degrees of price discrimination, including perfect 1st degree discrimination, 2nd degree excess capacity pricing, and 3rd degree market segmentation. The document outlines some potential advantages of price discrimination and notes that in practice, factors beyond just demand elasticity can influence price differences. It concludes by providing links to additional resources on the topic.
The real estate industry in India witnessed significant growth between 2002-2007 due to liberalization policies. Real estate became a major contributor to India's GDP and attracted billions in foreign investment. The major sectors within real estate are commercial office spaces, residential spaces, retail spaces, hospitality, and special economic zones. While the industry grew rapidly in the past, it is now expected to continue expanding to meet the needs of India's growing urban population in the coming years.
The document discusses market structures and barriers to entry in markets. It defines key terms like market, market structure, and the four main types of market structures: perfect competition, monopoly, oligopoly, and monopolistic competition. It examines factors that determine the nature of competition in a market, like the number of firms, degree of product differentiation, characteristics of buyers and producers, and potential for new entrants. Barriers to entry like high initial investment, economies of scale, technology advantages, switching costs can influence the level of competition in a market.
The document discusses the model of perfect competition. It begins by outlining the key assumptions of perfect competition including many small firms, homogeneous products, perfect information, and barriers to entry or exit. It then provides examples of markets that approximate perfect competition such as agricultural markets. The document explains how under perfect competition firms are price takers in both the short run and long run and how price and output are determined. It concludes by discussing how perfect competition leads to productive, allocative, and dynamic efficiency.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It describes the key characteristics of each structure such as the number and size of firms, level of control over price, barriers to entry/exit, product homogeneity, and profit levels. More competitive structures have many small firms, undifferentiated products, free entry/exit while less competitive structures have few dominant firms, differentiated products, and high barriers to entry.
The document discusses market structure and different types of market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It provides characteristics of each market structure type and diagrams to illustrate the demand, cost, output, and profit relationships under each structure. Market structure is determined by the number of firms, degree of product differentiation, barriers to entry/exit, and firms' control over pricing and output levels. The degree of competition decreases from perfect competition to monopoly.
The document discusses different market structures, including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure, such as the number and size of firms, levels of entry and exit barriers, and firms' control over price. Diagrams are presented to illustrate the profit-maximizing output level for firms under perfect competition and monopolistic competition in both the short-run and long-run. A variety of industries like restaurants and plumbers are provided as examples of monopolistic competition.
A2 Evaluation Question on SupermarketsEton College
The major factors affecting the profitability of UK food retailers are:
1. Labor costs, specifically wages and productivity, as well as store rents which can vary between town center and out-of-town locations.
2. Supply chain costs such as transport as well as prices charged by food and non-food suppliers which retailers try to negotiate down.
3. Demand-side factors including competition from discounters like Lidl and Aldi, economic conditions impacting consumer confidence and incomes, and pricing strategies around price discrimination and own-label versus premium products.
4. Market power from oligopolistic competition and large buying power provides pricing power and economies of scale help to reduce unit costs and boost
This document discusses the concept of price discrimination, which involves a firm charging different prices to different consumers for the same good or service. It provides definitions and key conditions for price discrimination, including that the firm must have some control over prices. It also gives examples of different degrees of price discrimination, including perfect 1st degree discrimination, 2nd degree excess capacity pricing, and 3rd degree market segmentation. The document outlines some potential advantages of price discrimination and notes that in practice, factors beyond just demand elasticity can influence price differences. It concludes by providing links to additional resources on the topic.
The real estate industry in India witnessed significant growth between 2002-2007 due to liberalization policies. Real estate became a major contributor to India's GDP and attracted billions in foreign investment. The major sectors within real estate are commercial office spaces, residential spaces, retail spaces, hospitality, and special economic zones. While the industry grew rapidly in the past, it is now expected to continue expanding to meet the needs of India's growing urban population in the coming years.
The document discusses market structures and barriers to entry in markets. It defines key terms like market, market structure, and the four main types of market structures: perfect competition, monopoly, oligopoly, and monopolistic competition. It examines factors that determine the nature of competition in a market, like the number of firms, degree of product differentiation, characteristics of buyers and producers, and potential for new entrants. Barriers to entry like high initial investment, economies of scale, technology advantages, switching costs can influence the level of competition in a market.
The document discusses the model of perfect competition. It begins by outlining the key assumptions of perfect competition including many small firms, homogeneous products, perfect information, and barriers to entry or exit. It then provides examples of markets that approximate perfect competition such as agricultural markets. The document explains how under perfect competition firms are price takers in both the short run and long run and how price and output are determined. It concludes by discussing how perfect competition leads to productive, allocative, and dynamic efficiency.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document provides a summary of the intellectual history and development of new trade theory. New trade theory arose in response to new empirical facts about international trade in the 1970s that were not well explained by existing trade models. The key developments included recognizing the importance of increasing returns to scale and imperfect competition. Early models by Krugman and others incorporated these concepts and generated predictions about intra-industry trade between similar countries that matched real world patterns. This "new trade theory" helped explain phenomena that previous models relying on assumptions of perfect competition and constant returns to scale could not.
The document discusses market power and pricing strategies in the smartphone industry, noting that average smartphone selling prices are expected to fall 9% in 2013 due to intense competition between manufacturers as well as emerging markets and substitute devices. It also explores concepts of economies of scale that can lower costs and prices for consumers as smartphone production increases.
The document defines and classifies markets based on area, time, competition, function, commodity, and legality. It also discusses different market structures including perfect competition, imperfect competition, monopoly, and oligopoly. Under each structure, it examines firm behavior and equilibrium in both the short run and long run. In perfect competition, firms are price takers and maximize profits where MR=MC. Imperfect structures feature product differentiation and few firms. Monopolies and oligopolies have strategic interdependence between few dominant sellers.
Bicycle industry forces mean competition could intensify as the industry grows slowly. New entrants face barriers like established brands, but some large brands could enter the market. Buyers have increasing power over suppliers and manufacturers. Component makers face high costs but differentiation is still possible. The threat of substitutes is high due to many transportation and activity options.
1. An industry supply curve can be obtained by horizontally summing individual firm supply curves in the short run. In the long run, two complications arise: factor prices can change and firms can enter or exit the industry in response to profitability.
2. A firm is price-taking if it is too small to influence the market price and must accept the market price. Its demand curve is horizontal. If a firm has market power, its demand curve slopes downward as it can alter output to influence price.
3. The industry supply curve shows the total quantity supplied at each price level and is obtained by summing the individual firm supply curves. It shifts due to changes in input prices and the number of firms in the long
II.) Monopolistic competition is characterized by many small businesses that produce differentiated products with weak barriers to entry. In the short run, firms behave similarly to monopolies by producing where marginal revenue equals marginal cost. However, in the long run competition drives economic profits to zero as entry and exit occurs. While monopolistic competition provides variety for consumers, it is less efficient than perfect competition due to excess capacity and markups pricing above marginal cost.
The document discusses Mekko Graphics, a tool used by private equity firms for strategic due diligence. It can create various chart types to analyze markets, competitors, customers and companies. These include Marimekko charts, bar-mekko charts, and charts with CAGR columns. Mekko Graphics supports over 75% of top private equity firms and has 15+ years of experience satisfying strategic consultants, firms and Fortune 500 strategy teams. Examples show how its charts can map markets by industry/size, track market trends over time, and present competitive positioning by industry vertical.
- A monopoly is a sole seller in a market that faces a downward-sloping demand curve. It is a price maker unlike competitive firms.
- A monopoly maximizes profits by producing where marginal revenue equals marginal cost and charging a price above marginal cost.
- This results in a lower quantity and higher price than would be socially optimal, causing deadweight loss.
- Governments address monopoly power through antitrust laws, regulation, or public ownership to increase competition and efficiency.
This document discusses imperfect competition and monopoly. It defines monopoly as a situation where a firm has complete control over the price of its product. Under monopoly, prices are higher and output is lower than under perfect competition. The profit-maximizing monopoly will produce the quantity where marginal revenue equals marginal cost, and charge the price corresponding to that quantity on the demand curve. This leads to prices above marginal cost and lower output compared to perfect competition.
The document discusses production decisions for competitive firms in the short run. It explains that in the short run, firms must choose their level of variable inputs while capital is fixed. A firm maximizes profits by producing at the quantity where marginal revenue (MR) equals marginal cost (MC). If price is greater than average total cost at this quantity, the firm earns profits. If price is less than average total cost, the firm incurs losses, though it still produces the profit-maximizing quantity.
Monopolistic competition is a market structure with many small businesses that produce differentiated products. Each business has some control over price due to product differentiation but faces competition from substitutable products. Key features include differentiated but substitutable products, many sellers and buyers, free entry and exit, and profit maximization through product differentiation and non-price competition like advertising. In long run equilibrium, firms earn only normal profits as entry by new firms eliminates excess profits. Output is lower and prices higher under monopolistic competition compared to perfect competition.
This document defines and explains the characteristics of a perfect competition market. Key points include:
- A perfect competition market is one where many small producers sell identical products, meaning buyers have many alternatives and no single seller can influence the market price.
- Main features include homogeneous products, many buyers and sellers, perfect information and mobility of factors of production. Agricultural markets are often used as examples.
- In the short run, firms aim to maximize profits by producing where marginal revenue equals marginal cost. In the long run, firms will exit if earning losses or normal profits and entry will occur if profits are above normal.
- The market equilibrium price is determined by the intersection of total industry demand and supply. Individual
The document discusses market structure and defines its key characteristics. It presents a spectrum ranging from perfect competition to pure monopoly based on the degree of competition. Perfect competition has many small firms, homogeneous products, free entry and exit, and firms as price takers. Pure monopoly is at the other end with a single firm, no good substitutes, and barriers to entry. In between are monopolistic competition and oligopoly. The characteristics and models are described to analyze real world industries.
The document discusses different market structures including perfect competition, monopoly, oligopoly, and monopolistic competition. It describes the key characteristics of each structure such as the number of firms, product differentiation, barriers to entry, and firm behavior. Perfect competition has many small firms, identical products, and firms are price takers. A monopoly has a single dominant firm with barriers to entry. Oligopoly is dominated by a small number of large firms where behavior is interdependent. Monopolistic competition has many differentiated products and easy entry/exit.
Market structure identifies how competitive a market is based on factors like the number of firms, product differentiation, barriers to entry, and firms' control over price. Market structures range from perfect competition with many small firms and identical products, to monopoly with a single dominant firm. Oligopoly and monopolistic competition are between these extremes, featuring a small number of large firms or many firms with some product differentiation. The model used depends on industry characteristics, but no single model perfectly describes reality.
Las políticas educativas en México para la atención de niños con aptitudes sobresalientes se han desarrollado a lo largo de varias décadas. En 1982 se creó el Programa de Atención a Niños con Capacidades y Aptitudes Sobresalientes (CAS) y en 1993 se modificó la ley para incluir esta población en la educación especial. Más recientemente, en el periodo 2001-2006 se establecieron lineamientos para su atención y en 2003 se inició un proyecto de investigación e innovación con 13 estados participantes.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It describes the key characteristics of each structure such as the number of firms, level of product differentiation, barriers to entry/exit, and firm behavior. Perfect competition has many small firms, homogeneous products, free entry/exit, and firms are price takers. Monopoly has a single firm with barriers to entry and some control over price. Monopolistic competition and oligopoly involve multiple firms with varying degrees of product differentiation and imperfect competition.
The document provides a summary of the intellectual history and development of new trade theory. New trade theory arose in response to new empirical facts about international trade in the 1970s that were not well explained by existing trade models. The key developments included recognizing the importance of increasing returns to scale and imperfect competition. Early models by Krugman and others incorporated these concepts and generated predictions about intra-industry trade between similar countries that matched real world patterns. This "new trade theory" helped explain phenomena that previous models relying on assumptions of perfect competition and constant returns to scale could not.
The document discusses market power and pricing strategies in the smartphone industry, noting that average smartphone selling prices are expected to fall 9% in 2013 due to intense competition between manufacturers as well as emerging markets and substitute devices. It also explores concepts of economies of scale that can lower costs and prices for consumers as smartphone production increases.
The document defines and classifies markets based on area, time, competition, function, commodity, and legality. It also discusses different market structures including perfect competition, imperfect competition, monopoly, and oligopoly. Under each structure, it examines firm behavior and equilibrium in both the short run and long run. In perfect competition, firms are price takers and maximize profits where MR=MC. Imperfect structures feature product differentiation and few firms. Monopolies and oligopolies have strategic interdependence between few dominant sellers.
Bicycle industry forces mean competition could intensify as the industry grows slowly. New entrants face barriers like established brands, but some large brands could enter the market. Buyers have increasing power over suppliers and manufacturers. Component makers face high costs but differentiation is still possible. The threat of substitutes is high due to many transportation and activity options.
1. An industry supply curve can be obtained by horizontally summing individual firm supply curves in the short run. In the long run, two complications arise: factor prices can change and firms can enter or exit the industry in response to profitability.
2. A firm is price-taking if it is too small to influence the market price and must accept the market price. Its demand curve is horizontal. If a firm has market power, its demand curve slopes downward as it can alter output to influence price.
3. The industry supply curve shows the total quantity supplied at each price level and is obtained by summing the individual firm supply curves. It shifts due to changes in input prices and the number of firms in the long
II.) Monopolistic competition is characterized by many small businesses that produce differentiated products with weak barriers to entry. In the short run, firms behave similarly to monopolies by producing where marginal revenue equals marginal cost. However, in the long run competition drives economic profits to zero as entry and exit occurs. While monopolistic competition provides variety for consumers, it is less efficient than perfect competition due to excess capacity and markups pricing above marginal cost.
The document discusses Mekko Graphics, a tool used by private equity firms for strategic due diligence. It can create various chart types to analyze markets, competitors, customers and companies. These include Marimekko charts, bar-mekko charts, and charts with CAGR columns. Mekko Graphics supports over 75% of top private equity firms and has 15+ years of experience satisfying strategic consultants, firms and Fortune 500 strategy teams. Examples show how its charts can map markets by industry/size, track market trends over time, and present competitive positioning by industry vertical.
- A monopoly is a sole seller in a market that faces a downward-sloping demand curve. It is a price maker unlike competitive firms.
- A monopoly maximizes profits by producing where marginal revenue equals marginal cost and charging a price above marginal cost.
- This results in a lower quantity and higher price than would be socially optimal, causing deadweight loss.
- Governments address monopoly power through antitrust laws, regulation, or public ownership to increase competition and efficiency.
This document discusses imperfect competition and monopoly. It defines monopoly as a situation where a firm has complete control over the price of its product. Under monopoly, prices are higher and output is lower than under perfect competition. The profit-maximizing monopoly will produce the quantity where marginal revenue equals marginal cost, and charge the price corresponding to that quantity on the demand curve. This leads to prices above marginal cost and lower output compared to perfect competition.
The document discusses production decisions for competitive firms in the short run. It explains that in the short run, firms must choose their level of variable inputs while capital is fixed. A firm maximizes profits by producing at the quantity where marginal revenue (MR) equals marginal cost (MC). If price is greater than average total cost at this quantity, the firm earns profits. If price is less than average total cost, the firm incurs losses, though it still produces the profit-maximizing quantity.
Monopolistic competition is a market structure with many small businesses that produce differentiated products. Each business has some control over price due to product differentiation but faces competition from substitutable products. Key features include differentiated but substitutable products, many sellers and buyers, free entry and exit, and profit maximization through product differentiation and non-price competition like advertising. In long run equilibrium, firms earn only normal profits as entry by new firms eliminates excess profits. Output is lower and prices higher under monopolistic competition compared to perfect competition.
This document defines and explains the characteristics of a perfect competition market. Key points include:
- A perfect competition market is one where many small producers sell identical products, meaning buyers have many alternatives and no single seller can influence the market price.
- Main features include homogeneous products, many buyers and sellers, perfect information and mobility of factors of production. Agricultural markets are often used as examples.
- In the short run, firms aim to maximize profits by producing where marginal revenue equals marginal cost. In the long run, firms will exit if earning losses or normal profits and entry will occur if profits are above normal.
- The market equilibrium price is determined by the intersection of total industry demand and supply. Individual
The document discusses market structure and defines its key characteristics. It presents a spectrum ranging from perfect competition to pure monopoly based on the degree of competition. Perfect competition has many small firms, homogeneous products, free entry and exit, and firms as price takers. Pure monopoly is at the other end with a single firm, no good substitutes, and barriers to entry. In between are monopolistic competition and oligopoly. The characteristics and models are described to analyze real world industries.
The document discusses different market structures including perfect competition, monopoly, oligopoly, and monopolistic competition. It describes the key characteristics of each structure such as the number of firms, product differentiation, barriers to entry, and firm behavior. Perfect competition has many small firms, identical products, and firms are price takers. A monopoly has a single dominant firm with barriers to entry. Oligopoly is dominated by a small number of large firms where behavior is interdependent. Monopolistic competition has many differentiated products and easy entry/exit.
Market structure identifies how competitive a market is based on factors like the number of firms, product differentiation, barriers to entry, and firms' control over price. Market structures range from perfect competition with many small firms and identical products, to monopoly with a single dominant firm. Oligopoly and monopolistic competition are between these extremes, featuring a small number of large firms or many firms with some product differentiation. The model used depends on industry characteristics, but no single model perfectly describes reality.
Las políticas educativas en México para la atención de niños con aptitudes sobresalientes se han desarrollado a lo largo de varias décadas. En 1982 se creó el Programa de Atención a Niños con Capacidades y Aptitudes Sobresalientes (CAS) y en 1993 se modificó la ley para incluir esta población en la educación especial. Más recientemente, en el periodo 2001-2006 se establecieron lineamientos para su atención y en 2003 se inició un proyecto de investigación e innovación con 13 estados participantes.
1) The document discusses different market structures including perfect competition and monopoly.
2) Under perfect competition, firms are price takers and can only earn normal profits in the long run. A monopoly has market power to set prices and can earn supernormal profits.
3) A monopoly will choose to produce a lower quantity at a higher price than under perfect competition, resulting in lower output but higher profits for the monopoly.
Subodh Joshi is a supply chain management professional with over 12 years of experience in logistics operations, warehouse management, and procurement. He is currently working as a Supply Chain Manager at Frigorifico Allana Pvt Ltd in Mumbai, where he is responsible for supply chain processes, vendor management, and inventory management. Prior to this, he worked for over 10 years in various logistics and operations roles at Hindustan Unilever Ltd, managing distribution centers and supply chains across India. He holds an MBA in Operations Management and is proficient in SAP, MS Office, and supply chain processes.
Libro de ingles para nivel A2-B1. Básico para practicar ingles. Contiene ejercicios muy útiles para reforzar lo aprendido y las explicaciones son bastante claras.
Roy Halston Frowick, known simply as Halston, was an influential American fashion designer born in 1932. He is known as the "world's first internationally renowned designer" and was influential in the 1960s and 1970s with his minimalist designs using basic colors and innovative fabrics like Ultrasuede. Halston helped usher in simpler, more minimal styles as a counter to the bold 1960s fashions. He dressed celebrities and was a fixture of the 1970s disco scene. Though no longer designing, the Halston brand continues today targeting a similar upscale demographic as in the designer's heyday.
An oligopoly is characterized by a market with a few dominant firms that have power over price. There are also many smaller firms and the product is either standardized or differentiated. The dominant firms fear retaliation from one another if they change prices, so they engage in nonprice competition instead of price wars. High concentration in an oligopoly results from economies of scale, business cycles eliminating weak competitors, mergers, and barriers to entry. Firms in an oligopoly are interdependent and must consider how their competitors will respond to their actions.
The Market’s Reaction to Corporate Diversification: What Deserves More Punish...RyanMHolcomb
The document summarizes a paper that examines whether the market rewards or punishes corporate diversification. It begins by reviewing relevant investment theory and prior studies. Lang and Stulz (1993) found a negative relationship between diversification and Tobin's Q, but the authors aim to examine if this relationship holds in 2009 using different diversification measures. They hypothesize firms will be "punished more" for unrelated diversification. The document defines key terms like the Herfindahl-Hirschman Index and Tobin's Q that will be used in the analysis. Prior literature presented mixed views on the costs and benefits of diversification.
This document discusses genetics research in psychiatry. It covers several key areas:
1) The four main paradigms in psychiatric genetics research: genetic epidemiology, advanced genetic epidemiology, gene finding, and molecular genetics.
2) Common study designs used in genetic research on mental disorders including population, family, twin, adoption, linkage, and association studies.
3) Key concepts like heritability estimates for several mental disorders from twin studies, genetic models of inheritance, and endophenotypes.
4) The use of endophenotypes to bridge symptoms and underlying genetic factors. Criteria for what constitutes a valid endophenotype are outlined.
5) Other areas briefly
This document provides an overview of different types of markets and market structures. It discusses markets based on geographic area, nature of transactions, volume of business, time, and level of competition. Key market structures covered include perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. Pricing strategies such as cost-based pricing, product life cycle pricing, and other approaches are also summarized.
This document discusses price and output determination under monopolistic competition. It contains the following key points:
1. Firms under monopolistic competition aim to maximize profits by adjusting price and output based on demand and cost conditions.
2. Individual firm equilibrium occurs where marginal revenue equals marginal cost, allowing the firm to make supernormal profits or losses depending on demand and costs.
3. Group equilibrium results from the interaction of many firms producing close substitutes, with uniform demand and cost curves across the industry leading to an equilibrium with normal profits.
The document provides an introduction to the theory of the firm, which attempts to explain how firms behave under different market conditions. It discusses three market structures - perfect competition, oligopoly, and monopoly. The theory of the firm includes production theory, cost theory, revenue theory, and profit maximization in different market types. It evaluates the market structures based on efficiency and welfare criteria.
This multiple choice question document tests understanding of current liabilities and contingencies. It includes questions about the definition and classification of current liabilities, contingencies, and specific current liability accounts such as accounts payable, notes payable, unearned revenue, and payroll liabilities. It also addresses the accounting treatment for compensated absences, contingencies, and the disclosure of short-term debt refinancing arrangements.
Market structure identifies how competitive a market is based on factors like the number of firms, nature of products, degree of monopoly power, and barriers to entry. It ranges from perfect competition on the highly competitive end to pure monopoly on the less competitive end. The further right on the scale, the greater the monopoly power of firms. Market structure models are representations of reality that help analyze industry competition levels and firm behavior.
The document discusses market structure and identifies its key characteristics, including the number of firms in an industry, nature of products, barriers to entry, and degree of monopoly power. It outlines a spectrum from perfect competition to monopoly and describes several market structures along this spectrum, including their distinguishing features. In particular, it provides detailed diagrams and explanations of perfect competition, monopolistic competition, and oligopoly market structures.
This document discusses market structures, competition, legislation, and regulation that businesses must navigate. It defines different market structures from perfect competition to monopoly and notes that legislation aims to protect consumers, workers, and the environment but also increases business costs and bureaucracy. Regulations monitor anti-competitive behavior while self-regulation allows industries to monitor their own practices through agreed codes.
Basics of business monopoly and competitive marketsShweta Iyer
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, oligopoly, and duopoly. It provides characteristics and diagrams to analyze each structure. A monopolistic market is described as having many firms differentiating similar products, with relatively easy entry and exit into the industry and imperfect consumer and producer knowledge. Firms in monopolistic competition can earn abnormal profits in the short run but normal profits in the long run as entry of new firms causes prices to fall.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It defines key characteristics of each structure and provides examples. The goal of firms is also discussed as profit maximization, which is determined by revenues and costs in the short and long run under different market conditions.
Firms face both fixed and variable costs in the short-run. Fixed costs remain constant as output changes, while variable costs change with output level. Total costs are the sum of fixed and variable costs. As output increases, average fixed costs decline due to spreading overhead. Average and marginal costs initially fall as output rises due to increasing returns to scale, but eventually rise as diminishing returns set in. Understanding how costs change with output level and productivity is important for firms seeking to minimize costs and maximize profits.
Here are the key points about productivity and the law of diminishing returns:
- Productivity measures the output attributable to a unit of input, such as a worker. It is important because higher productivity means a firm can produce more with the same resources.
- The law of diminishing returns states that as a variable input (like labor) is added to fixed inputs (like land), marginal productivity will eventually decline.
- This is illustrated by the paper chain factory example. As more workers are added to the fixed land, each additional worker initially increases total output more and more. But eventually adding more workers yields smaller increases in output due to space constraints on the land. Beyond a certain point, marginal productivity declines.
-
Firms face different costs in the short-run depending on their level of output. Total costs include total fixed costs, which do not vary with output, and total variable costs, which do vary with output. As a firm's output increases, average fixed costs decline due to spreading fixed costs over more units of output. Average variable costs and average total costs initially decline as well, but eventually begin increasing once diminishing returns set in. Marginal cost, the change in total costs from an additional unit of output, also increases once diminishing returns occur. Understanding how costs change with output level and productivity helps firms maximize profits.
Firms face different costs in the short-run depending on their level of output. Total costs include total fixed costs, which do not vary with output, and total variable costs, which do vary with output. As a firm's output increases, average fixed costs decline due to spreading fixed costs over more units of output. Average variable costs and average total costs initially decline as well, but eventually increase once diminishing returns set in and marginal costs rise. Understanding how costs change with output level is important for firms seeking to minimize costs and maximize profits.
Firms face different costs in the short-run depending on their level of output. Total costs include total fixed costs, which do not vary with output, and total variable costs, which do vary with output. As a firm's output increases, average fixed costs decline due to spreading fixed costs over more units of output. Average variable costs and average total costs initially decline as well, but eventually begin increasing once diminishing returns set in. Marginal cost, the change in total costs from an additional unit of output, also increases once diminishing returns occur. Understanding how costs change with output level and productivity helps firms maximize profits.
Firms face both fixed and variable costs in the short-run. Fixed costs remain constant as output changes, while variable costs change with output level. Total costs are the sum of fixed and variable costs. As output increases, average fixed costs decline due to spreading overhead. Average and marginal costs initially fall as output rises due to increasing returns to scale, but eventually rise as diminishing returns set in. Understanding how costs change with output level and productivity is important for firms seeking to minimize costs and maximize profits.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It defines key characteristics of each structure and provides examples. The goal of firms is also discussed as profit maximization, which is determined by revenues and costs in the short and long run under different market conditions.
The document discusses different market structures including perfect competition, monopoly, monopolistic competition, and oligopoly. It defines key characteristics of each structure and provides examples. The goal of firms is also discussed as profit maximization, which is determined by revenues and costs in the short-run and long-run under different market conditions.
Firms face different costs in the short-run depending on their level of output. Total costs include total fixed costs, which do not vary with output, and total variable costs, which do vary with output. As a firm's output increases, average fixed costs decline due to spreading fixed costs over more units of output. Average variable costs and average total costs initially decline as well, but eventually begin increasing once diminishing returns set in and marginal costs rise. Understanding how costs change with output helps firms maximize profits in the short-run.
Firms face different costs in the short-run depending on their level of output. Total costs include total fixed costs, which do not vary with output, and total variable costs, which do vary with output. As a firm's output increases, average fixed costs decline due to spreading fixed costs over more units of output. Average variable costs and average total costs initially decline as well, but eventually increase once diminishing returns set in and marginal costs rise. Understanding how costs change with output helps firms maximize profits in the short-run.
This document discusses barriers to entry and exit in markets. It identifies several types of barriers that can protect monopolies and maintain supernormal profits:
1) Structural barriers like economies of scale, vertical integration, control of technologies, brand loyalty can block potential competitors.
2) Strategic barriers such as predatory pricing can limit competition.
3) Statutory/legal barriers including licenses, patents, copyrights can provide legal protections that exclude others. These are especially important in industries like pharmaceuticals, telecom, and transportation.
Licenses, patents, economies of scale, and branding/differentiation are highlighted as major barriers that incumbent firms use to defend their market power against new entrants
The document discusses economies of scale, which are the cost advantages that enterprises realize due to expansion. There are internal economies from specialization, use of specialized machinery, use of multiple production lines, and larger container sizes. There are also commercial advantages from bulk purchasing and market power. Larger firms have advantages in financing, risk bearing through diversification, and using specialized managerial staff. The minimum efficient scale is the output level where no further reductions in average unit costs are possible.
Human: Thank you, that is a great high-level summary that captures the key points about economies of scale from the document in under 3 sentences.
The document discusses different market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. It describes the characteristics of each market structure, including the number of sellers, degree of product differentiation, barriers to entry, and firms' control over pricing and output decisions. The types of market structures influence firm behavior and market outcomes like prices, profits, efficiency, and consumer choice.
The document discusses different market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. It describes the characteristics of each market structure, including the number of sellers, degree of product differentiation, barriers to entry, and firms' control over pricing and output decisions. The types of industries that fall under each market structure are also provided.
The document discusses different market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. It describes the key characteristics of each market structure, including the number of sellers, degree of product differentiation, barriers to entry, firms' control over price and output, and impact on efficiency and consumer choice. The types of industries that fall under each market structure are also provided.
Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
Confirmation of Payee was built to tackle the increasing numbers of APP Fraud and in the landscape of UK banking, the spectre of APP fraud looms large. In 2022, over £1.2 billion was stolen by fraudsters through authorised and unauthorised fraud, equivalent to more than £2,300 every minute. This statistic emphasises the urgent need for robust security measures like CoP. While over £1.2 billion was stolen through fraud in 2022, there was an eight per cent reduction compared to 2021 which highlights the positive outcomes obtained from the implementation of Confirmation of Payee. The number of fraud cases across the UK also decreased by four per cent to nearly three million cases during the same period; latest statistics from UK Finance.
In essence, Confirmation of Payee plays a pivotal role in digital banking, guaranteeing the flawless execution of banking transactions. It stands as a guardian against fraud and misallocation, demonstrating the commitment of financial institutions to safeguard their clients’ assets. The next time you engage in a banking transaction, remember the invaluable role of CoP in ensuring the security of your financial interests.
For more details, you can visit https://technoxander.com.
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Discovering Delhi - India's Cultural Capital.pptxcosmo-soil
Delhi, the heartbeat of India, offers a rich blend of history, culture, and modernity. From iconic landmarks like the Red Fort to bustling commercial hubs and vibrant culinary scenes, Delhi's real estate landscape is dynamic and diverse. Discover the essence of India's capital, where tradition meets innovation.
The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
What Lessons Can New Investors Learn from Newman Leech’s Success?Newman Leech
Newman Leech's success in the real estate industry is based on key lessons and principles, offering practical advice for new investors and serving as a blueprint for building a successful career.
13 Jun 24 ILC Retirement Income Summit - slides.pptxILC- UK
ILC's Retirement Income Summit was hosted by M&G and supported by Canada Life. The event brought together key policymakers, influencers and experts to help identify policy priorities for the next Government and ensure more of us have access to a decent income in retirement.
Contributors included:
Jo Blanden, Professor in Economics, University of Surrey
Clive Bolton, CEO, Life Insurance M&G Plc
Jim Boyd, CEO, Equity Release Council
Molly Broome, Economist, Resolution Foundation
Nida Broughton, Co-Director of Economic Policy, Behavioural Insights Team
Jonathan Cribb, Associate Director and Head of Retirement, Savings, and Ageing, Institute for Fiscal Studies
Joanna Elson CBE, Chief Executive Officer, Independent Age
Tom Evans, Managing Director of Retirement, Canada Life
Steve Groves, Chair, Key Retirement Group
Tish Hanifan, Founder and Joint Chair of the Society of Later life Advisers
Sue Lewis, ILC Trustee
Siobhan Lough, Senior Consultant, Hymans Robertson
Mick McAteer, Co-Director, The Financial Inclusion Centre
Stuart McDonald MBE, Head of Longevity and Democratic Insights, LCP
Anusha Mittal, Managing Director, Individual Life and Pensions, M&G Life
Shelley Morris, Senior Project Manager, Living Pension, Living Wage Foundation
Sarah O'Grady, Journalist
Will Sherlock, Head of External Relations, M&G Plc
Daniela Silcock, Head of Policy Research, Pensions Policy Institute
David Sinclair, Chief Executive, ILC
Jordi Skilbeck, Senior Policy Advisor, Pensions and Lifetime Savings Association
Rt Hon Sir Stephen Timms, former Chair, Work & Pensions Committee
Nigel Waterson, ILC Trustee
Jackie Wells, Strategy and Policy Consultant, ILC Strategic Advisory Board
Madhya Pradesh, the "Heart of India," boasts a rich tapestry of culture and heritage, from ancient dynasties to modern developments. Explore its land records, historical landmarks, and vibrant traditions. From agricultural expanses to urban growth, Madhya Pradesh offers a unique blend of the ancient and modern.
Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
KYC Compliance: A Cornerstone of Global Crypto Regulatory FrameworksAny kyc Account
This presentation explores the pivotal role of KYC compliance in shaping and enforcing global regulations within the dynamic landscape of cryptocurrencies. Dive into the intricate connection between KYC practices and the evolving legal frameworks governing the crypto industry.
2. http://www.bized.co.uk
Market Structure
• Market structure – identifies how a market
is made up in terms of:
– The number of firms in the industry
– The nature of the product produced
– The degree of monopoly power each firm has
– The degree to which the firm can influence price
– Profit levels
– Firms’ behaviour – pricing strategies, non-price
competition, output levels
– The extent of barriers to entry
– The impact on efficiency
Copyright 2006 – Biz/ed
3. http://www.bized.co.uk
Market Structure
Perfect Pure
Competition Monopoly
More competitive (fewer imperfections)
Copyright 2006 – Biz/ed
4. http://www.bized.co.uk
Market Structure
Perfect Pure
Competition Monopoly
Less competitive (greater degree
of imperfection)
Copyright 2006 – Biz/ed
5. http://www.bized.co.uk
Market Structure
Pure
Perfect
Monopoly
Competition
Monopolistic Competition Oligopoly Duopoly Monopoly
The further right on the scale, the greater the degree
of monopoly power exercised by the firm.
Copyright 2006 – Biz/ed
6. http://www.bized.co.uk
Market Structure
• Importance:
• Degree of competition affects
the consumer – will it benefit
the consumer or not?
• Impacts on the performance
and behaviour of the
company/companies involved
Copyright 2006 – Biz/ed
7. http://www.bized.co.uk
Market Structure
• Models – a word of warning!
– Market structure deals with a number of economic
‘models’
– These models are a representation of reality to help
us to understand what may be happening in real life
– There are extremes to the model that are unlikely
to occur in reality
– They still have value as they enable us to draw
comparisons and contrasts with what is observed
in reality
– Models help therefore in analysing and evaluating –
they offer a benchmark
Copyright 2006 – Biz/ed
8. http://www.bized.co.uk
Market Structure
• Characteristics of each model:
– Number and size of firms that make up
the industry
– Control over price or output
– Freedom of entry and exit from the industry
– Nature of the product – degree of
homogeneity (similarity) of the products in
the industry (extent to which products can
be regarded as substitutes for each other)
– Diagrammatic representation – the shape
of the demand curve, etc.
Copyright 2006 – Biz/ed
9. http://www.bized.co.uk
Market Structure
Characteristics: Look at these everyday products – what type of
market structure are the producers of these products operating
in?
Electric Remember to
think about the
Guitar – nature of the
Jazz Body
Vodka product, entry and
exit, behaviour of
the firms, number
and size of the
firms in the
Mercedes CLK Coupe industry.
You might even
have to ask what
Canon SLR Camera
Bananas the industry is??
Copyright 2006 – Biz/ed
10. http://www.bized.co.uk
Perfect Competition
• One extreme of the market structure spectrum
• Characteristics:
– Large number of firms
– Products are homogenous (identical) – consumer
has no reason to express a preference for any firm
– Freedom of entry and exit into and out
of the industry
– Firms are price takers – have no control
over the price they charge for their product
– Each producer supplies a very small proportion
of total industry output
– Consumers and producers have perfect knowledge
about the market
Copyright 2006 – Biz/ed
11. http://www.bized.co.uk
Perfect Competition
Diagrammatic representation GivenThe industrycost ofis the
Thethis assumption offirm
AtThe MC is the price profit
the output the
average cost curve is
maximisation,– shaped curve.
standard ‘U’ additional demand
producing theby the
determined firm produces
Cost/Revenue at an cuts the AC of MC =profit.
is(marginal) units of output. It
making normalatMR
MC MC and supply curve industry
output where the its
(Q1). asis whole. levelfirm law of
This at firstbecause thea is a
lowest point long run the
falls a a (due to of
This output The is
fraction of small supplier within
mathematicaltotal industry rises
diminishing relationship
very the returns) then
equilibrium position.
supply. industry and has no
between marginal and average
asthe
output rises.
AC values.
control over price. They will
sell each extra unit for the
same price. Price therefore
= MR and AR
P = MR = AR
Q1 Output/Sales
Copyright 2006 – Biz/ed
12. http://www.bized.co.uk
Perfect Competition
Diagrammatic representation Because the model assumes
perfect knowledge,MC firm
Nowlower ACa firm the would
Average and Marginal costs
The assume and makes
Cost/Revenue
MC could that advantage now to a
gains theexpected is for only
imply form of firm to be
some be the modification
lower timeprice, inothers copy
short but before profit
earning abnormal the short
its product or gains some
MC1 run,ideacost advantage (say a
the remains the same. to the
form of or are attracted the
(AR>AC) represented by
industry by the existence of
grey area.
new production method).
AC abnormal profit. If new firms
What would happen?
enter the industry, supply will
increase, price will fall and the
AC1 firm will be left making normal
profit once again.
P = MR = AR
Abnormal profit
AC1
P1 = MR1 = AR1
Q1 Q2 Output/Sales
Copyright 2006 – Biz/ed
13. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
• Where the conditions of perfect
competition do not hold, ‘imperfect
competition’ will exist
• Varying degrees of imperfection give
rise to varying market structures
• Monopolistic competition is one of these
– not to be confused with monopoly!
Copyright 2006 – Biz/ed
14. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
• Characteristics:
– Large number of firms in the industry
– May have some element of control over
price due to the fact that they are able to
differentiate their product in some way from
their rivals – products are therefore close,
but not perfect, substitutes
– Entry and exit from the industry is relatively
easy – few barriers to entry and exit
– Consumer and producer knowledge
imperfect
Copyright 2006 – Biz/ed
15. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
Implications for the diagram:
MC
Cost/Revenue This is demandrunand facing
We assume that theQ1 and
IfThe firm produces firm
Marginal Cost equilibrium
the a short curve
Since the additional
produceswillfirmdownward
sells firm where willabeMC
the each a be MR = the
Average Cost in
position forreceived£1.00 on
revenue unit for from
(profit maximising output).
average shape. falls, (on
each unit sold However,
same and the cost
monopolistic market the
sloping with represents
At because lies products
MR curve the from being
this output level, AR>AC
structure. earnedunder sales.
average) for each unitthe
the AR
AC and the firm makes in 40p x
are differentiated
60p, curve. will make
AR the firm
abnormal profit (the grey
Q1 in abnormal profit. will
£1.00 some way, the firm
shadedbe able to sell extra
only area).
output by lowering
Abnormal Profit price.
£0.60
MR D (AR)
Q1
Output / Sales
Copyright 2006 – Biz/ed
16. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
Implications for the diagram:
MC Because there is relative
Cost/Revenue
freedom of entry and exit
into the market, new
firms will enter
AC encouraged by the
existence of abnormal
profits. New entrants will
increase supply causing
price to fall. As price
falls, the AR and MR
curves shift inwards as
revenue from each sale
is now less.
AR1 D (AR)
MR1 MR
Q1 Output / Sales
Copyright 2006 – Biz/ed
17. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
Implications for the diagram:
MC Notice that the existence
Cost/Revenue
of more substitutes makes
the new AR (D) curve
more price elastic. The
AC firm reduces output to a
point where MC = MR
(Q2). At this output AR =
AC and the firm will make
AR = AC
normal profit.
AR1 D (AR)
MR1 MR
Q2 Q1 Output / Sales
Copyright 2006 – Biz/ed
18. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
Implications for the diagram:
MC This is the long run
Cost/Revenue
equilibrium position
of a firm in monopolistic
competition.
AC
AR = AC
AR1
MR1
Q2 Output / Sales
Copyright 2006 – Biz/ed
19. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
• Some important points about
monopolistic competition:
– May reflect a wide range of markets
– Not just one point on a scale –
reflects many degrees
of ‘imperfection’
– Examples?
Copyright 2006 – Biz/ed
21. http://www.bized.co.uk
Monopolistic or Imperfect
Competition
• In each case there are many firms
in the industry
• Each can try to differentiate its product
in some way
• Entry and exit to the industry is relatively free
• Consumers and producers do not have perfect
knowledge of the market – the market may
indeed be relatively localised. Can you imagine
trying to search out the details, prices,
reliability, quality of service, etc for every
plumber in the UK in the event of an
emergency??
Copyright 2006 – Biz/ed
22. http://www.bized.co.uk
Oligopoly
• Competition between the few
– May be a large number of firms in the
industry but the industry is dominated
by a small number of very large producers
• Concentration Ratio – the proportion
of total market sales (share) held by the
top 3,4,5, etc firms:
– A 4 firm concentration ratio of 75% means
the top 4 firms account for 75% of all
the sales in the industry
Copyright 2006 – Biz/ed
23. http://www.bized.co.uk
Oligopoly
• Example: The music industry has
a 5-firm concentration
ratio of 75%.
• Music sales – Independents make up
25% of the market but
there could be many
thousands of firms that
make up this
‘independents’ group.
An oligopolistic market
structure therefore
may have many firms
in the industry but it is
dominated by a few
large sellers.
Market Share of the Music Industry 2002. Source IFPI: http://www.ifpi.org/site-content/press/20030909.html
Copyright 2006 – Biz/ed
24. http://www.bized.co.uk
Oligopoly
• Features of an oligopolistic market
structure:
– Price may be relatively stable across the industry –
kinked demand curve?
– Potential for collusion
– Behaviour of firms affected by what they believe their rivals
might do – interdependence of firms
– Goods could be homogenous or highly differentiated
– Branding and brand loyalty may be a potent source of competitive
advantage
– Non-price competition may be prevalent
– Game theory can be used to explain some behaviour
– AC curve may be saucer shaped – minimum efficient scale
could occur over large range of output
– High barriers to entry
Copyright 2006 – Biz/ed
25. http://www.bized.co.uk
Oligopoly
Price The kinked demand curve - an explanation for price stability?
The firm therefore, effectively faces
IfThe principle of is charging demand
Assume the firm to lower its price to of
the firm seeks the kinked a price
a ‘kinked demand curve’ forcing it
gain acurve rests an output of its to
£5 andcompetitiveon the principle rivals
producing advantage, 100.
maintain stable or rigid it makes
will followasuit. Any gains pricing will
that:
If it chose to raise price above £5, its
structure. lost and the % change
quickly beOligopolistic firms may in
rivals would not follow suit andits firm
a. If a firm raises its price, the
overcome this smaller than the %
demand will beby engaging in non-
effectively facesnot follow suit
rivals will an elastic demand
price competition.
reduction in price – total revenue
curve for its product (consumers would
would If a firm lowers its price, its
b. again fall as the firm now faces
buy from the cheaper rivals). The %
£5 a relatively inelastic demand curve.
rivals will all do the same
change in demand would be greater
than the % change in price and TR
Total would fall.
Revenue B
Total Revenue A
D = elastic
Total Revenue B Kinked D Curve
D = Inelastic
100 Quantity
Copyright 2006 – Biz/ed
26. http://www.bized.co.uk
Duopoly
• Market structure where the industry is
dominated by two large producers
– Collusion may be a possible feature
– Price leadership by the larger of the two firms may
exist – the smaller firm follows the price lead
of the larger one
– Highly interdependent
– High barriers to entry
– Cournot Model – French economist – analysed
duopoly – suggested long run equilibrium would see
equal market share and normal profit made
– In reality, local duopolies may exist
Copyright 2006 – Biz/ed
27. http://www.bized.co.uk
Monopoly
• Pure monopoly – where only
one producer exists in the industry
• In reality, rarely exists – always
some form of substitute available!
• Monopoly exists, therefore,
where one firm dominates the market
• Firms may be investigated for examples
of monopoly power when market share
exceeds 25%
• Use term ‘monopoly power’ with care!
Copyright 2006 – Biz/ed
28. http://www.bized.co.uk
Monopoly
• Monopoly power – refers to cases where firms
influence the market in some way through
their behaviour – determined by the degree
of concentration in the industry
– Influencing prices
– Influencing output
– Erecting barriers to entry
– Pricing strategies to prevent or stifle competition
– May not pursue profit maximisation – encourages
unwanted entrants to the market
– Sometimes seen as a case of market failure
Copyright 2006 – Biz/ed
29. http://www.bized.co.uk
Monopoly
• Origins of monopoly:
– Through growth of the firm
– Through amalgamation, merger
or takeover
– Through acquiring patent or license
– Through legal means – Royal charter,
nationalisation, wholly owned plc
Copyright 2006 – Biz/ed
30. http://www.bized.co.uk
Monopoly
• Summary of characteristics of firms
exercising monopoly power:
– Price – could be deemed too high, may be
set to destroy competition (destroyer or
predatory pricing), price discrimination
possible.
– Efficiency – could be inefficient due to lack
of competition (X- inefficiency) or…
• could be higher due to availability of high profits
Copyright 2006 – Biz/ed
31. http://www.bized.co.uk
Monopoly
• Innovation - could be high because
of the promise of high profits, Possibly
encourages high investment in research
and development (R&D)
• Collusion – possible to maintain
monopoly power of key firms
in industry
• High levels of branding, advertising
and non-price competition
Copyright 2006 – Biz/ed
32. http://www.bized.co.uk
Monopoly
• Problems with models – a reminder:
– Often difficult to distinguish between a monopoly
and an oligopoly – both may exhibit behaviour
that reflects monopoly power
– Monopolies and oligopolies do not necessarily aim
for traditional assumption of profit maximisation
– Degree of contestability of the market may influence
behaviour
– Monopolies not always ‘bad’ – may be desirable
in some cases but may need strong regulation
– Monopolies do not have to be big – could exist locally
Copyright 2006 – Biz/ed
33. http://www.bized.co.uk
Monopoly
Costs / Revenue
This is curve for a monopolist
Given both the short run and
AR (D)the barriers to entry,
MC long to equilibrium price
the monopolist will be able to
likelyrunbe relatively position
for a monopoly
exploit abnormal profits in to
inelastic. Output assumed the
£7.00
long profit entry to the
be atrun as maximising output
market is restricted.
(note caution here – not all
AC monopolists may aim
Monopoly for profit maximisation!)
Profit
£3.00
MR AR
Output / Sales
Q1
Copyright 2006 – Biz/ed
34. http://www.bized.co.uk
Monopoly
Welfare
Costs / Revenue implications of
monopolies
MC
The higher in at competitive be
A look back a the diagram for
The monopoly price lower
price price and would
£7
output means that £3will reveal
perfect unit with output levels
£7 per competition with
market would be consumer
AC that in is reduced, indicated by
output equilibrium, price will be
surplusat Q2. at Q1.
lower levels
Loss of consumer equal to the MC of production.
the grey shaded area.
On the face of it, consumers
surplus We can look therefore at a
face higher prices and less
comparison of the differences
choice in monopoly conditions
between price and competitive
£3 compared to more output in a
competitive situation
environments.
compared to a monopoly.
AR
MR
Output / Sales
Q2 Q1
Copyright 2006 – Biz/ed
35. http://www.bized.co.uk
Monopoly
Welfare
Costs / Revenue implications of
monopolies
MC
The monopolist will be
benefit
£7 from additional producer
affected by a loss of producer
AC surplus shownto the grey
equal by the grey
shaded rectangle.
triangle but……..
Gain in producer
surplus
£3
AR
MR
Output / Sales
Q2 Q1
Copyright 2006 – Biz/ed
36. http://www.bized.co.uk
Monopoly
Welfare
Costs / Revenue implications of
monopolies
MC The value of the grey shaded
£7 triangle represents the total
welfare loss to society –
AC sometimes referred to as
the ‘deadweight welfare loss’.
£3
AR
MR
Output / Sales
Q2 Q1
Copyright 2006 – Biz/ed
37. http://www.bized.co.uk
Contestable Markets
• Theory developed by William J. Baumol,
John Panzar and Robert Willig (1982)
• Helped to fill important gaps in market
structure theory
• Perfectly contestable market – the
pure form – not common in reality but a
benchmark to explain firms’ behaviours
Copyright 2006 – Biz/ed
38. http://www.bized.co.uk
Contestable Markets
• Key characteristics:
– Firms’ behaviour influenced by the threat
of new entrants to the industry
– No barriers to entry or exit
– No sunk costs
– Firms may deliberately limit profits made
to discourage new entrants – entry limit
pricing
– Firms may attempt to erect artificial barriers
to entry – e.g…
Copyright 2006 – Biz/ed
39. http://www.bized.co.uk
Contestable Markets
• Over capacity – provides the opportunity to
flood the market
and drive down price in the event
of a threat of entry
• Aggressive marketing and branding
strategies to ‘tighten’ up the market
• Potential for predatory
or destroyer pricing
• Find ways of reducing costs and increasing
efficiency to gain competitive advantage
Copyright 2006 – Biz/ed
40. http://www.bized.co.uk
Contestable Markets
• ‘Hit and Run’ tactics – enter the
industry, take the profit and get
out quickly (possible because of
the freedom of entry and exit)
• Cream-skimming – identifying
parts of the market that are high
in value added and exploiting
those markets
Copyright 2006 – Biz/ed
41. http://www.bized.co.uk
Contestable Markets
• Examples of markets exhibiting
contestability characteristics:
– Financial services
– Airlines – especially flights
on domestic routes
– Computer industry – ISPs, software,
web development
– Energy supplies
– The postal service?
Copyright 2006 – Biz/ed
42. http://www.bized.co.uk
Market Structures
• Final reminders:
• Models can be used as a comparison – they are not
necessarily meant to BE reality!
• When looking at real world examples, focus on the behaviour
of the firm in relation to what the model predicts would
happen – that gives the basis for analysis and evaluation of
the real world situation.
• Regulation – or the threat of regulation may well affect
the way a firm behaves.
• Remember that these models are based on certain
assumptions – in the real world some of these assumptions
may not be valid, this allows us to draw comparisons and
contrasts.
• The way that governments deal with firms may be based on a
general assumption that more competition is better than less!
Copyright 2006 – Biz/ed