MARKET STRUCTURES - PowerPoint PPT Presentation

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MARKET STRUCTURES

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MARKET STRUCTURES Author: Ben Statham Last modified by: Matthews Created Date: ... On-screen Show Company: Academic Colleges Group International Other titles: – PowerPoint PPT presentation

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Title: MARKET STRUCTURES


1
MARKET STRUCTURES
2
COMPETITION
Imperfect
Perfect
Some control over price
No control over price
No control over price
Some control over price
p
p
d
d
q
q
3
Perfect Competition
Many
Sellers Product Barriers to Entry Example
Homogenious - Identical
None
Dairy farmers
4
Monopolistic Competition
Many
Sellers Product Barriers to Entry Example
Differentiated
Weak
Restaurants
5
Oligopoly
A Few
Sellers Product Barriers to Entry Example
Differentiated
Strong
Oil Companies
6
Duopoly
Two
Sellers Product Barriers to entry Example
Differentiated
Strong
Mobile Phone Service
7
Monopoly
One
Sellers Product Barriers to Entry Example
One - no close substitutes
Strong
Vectra NZ
8
Non-Price Competition
  • Product Differentiation
  • Make the product appear different
  • Product Variation
  • Make the product really different

9
Product Differentiation
Location
Advertising
Branding
Packaging
Sponsorship
Service
Loyalty Schemes
10
Product Variation
  • Product modification
  • When producers make real changes to their product
    eg Vodofone introduce txt capabilities to their
    phone service
  • Vertical product variation when producers
    offer variations of a product
  • Eg Vodofone offer many plans and prepay options.

11
Kinked Demand Curve
If producer reduces price (from P2 to P3) the
competitors are likely to follow. The result is a
smaller increase in sales from q2 to q3.
(inelastic demand).
p
P1 P2 P3
d
If producer increases price (P2 to P1) the
competitors are unlikely to follow. The result is
a larger fall in sales from q2 to q1 (elastic
demand)
q
q1 q2 q3
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