Presentation on theme: "Competition in Economics Competition in Economics Abstract models and reality."— Presentation transcript:
Competition in Economics Competition in Economics Abstract models and reality
Spectrum of competition Perfect competition Tiny firms Price takers Identical products Only normal profit Prod. & Alloc. efficiency Monopoly Single supplier Sets p or q. Price above cost? Abnormal profit Inefficiency?
Imperfection, e.g. Oligopoly Major & minor players Major & minor players High concentration ratio High concentration ratio Differentiation Differentiation Interdependence Interdependence Fierce competition? Fierce competition? Collusion? Collusion? Contestable? Contestable?
Competitive advantage Definition: –A distinctive feature that makes a business successful