Ch. 7: A Spectrum of Markets

1
Ch. 7 A Spectrum of Markets

• GR. 11 ECONOMICS (CIE3M1)
• M. Nicholson

2
Perfect Competition

• Many sellers of identical product
• Easy to enter the industry
• No control over price and no advertising
• Examples stock market, agriculture

3
Monopoly

• One seller and no substitutes
• Very difficult or impossible to enter the
  industry
• Price-maker ? much control over price
• Advertise to improve image
• Examples ? water, urban transit, cable

4
Oligopoly

• Homogeneous some product distinction
• Differentiated much product distinction
• Few sellers and difficult to enter
• Some control over price
• Much advertising for differentiated
• Automobiles, beer differentiated
• Steel, cement homogeneous

5
Monopolistic Competition

• Many sellers with some product distinction
• Easy to enter the industry, but a little control
  over price
• Lots of advertising
• Examples ? Fast food, clothing

6
Concentration In Canadian Industry

• Concentration ratio measures the proportion of
  industrys sales by top 4 and top 8
• Tobacco, oil and transportation equipment have
  little competition

7
Restricting Competition

• Unfair competition
• Establishing a cartel
• Interlocking directorates
• Mergers
• Establishing a holding company
• Horizontal, vertical, conglomerate

8
Advantages Of Large-Scale Operations

• Money available for research to develop new and
  better products and more efficient, cheaper
  production methods
• Large quantity production allows for specialized
  machinery (capital) and labour (human) that
  increases efficiency and lowers cost (e.g.
  automobiles)

9
Government Regulation

• Government Ownership natural monopolies
• Laws to promote competition
• Regulation of prices and services