Highly Competitive Markets

 Aim: To what extent is OPEC a monopoly?  Homework: Read section on Imperfectly Competitive Markets, write down definitions and answer questions 1-4 on first page of reading  Do Now: What are the characteristics of Perfect Competition and Monopolistic Competition? ◦ (T-Chart)

 Perfect Competition Monopolistic Competition

 ***Having a large number of independent buyers and sellers thus promotes competition  Similarities of perfect and monopolistic systems ◦ governed by laws of supply and demand ◦ Many independent buyers and sellers, who are informed  Nonprice competition = advertising and differentiation ◦ ***Profits

 Aim: To what extent is OPEC a monopoly?  Homework: Read section on Market Regulation, write down definitions and answer questions 1-4 on first page of reading  Do Now: Finish reading OPEC article and complete questions

 Imperfect Competition = higher prices  Oligopoly – few large sellers control most of production of a good or service (70%) ◦ Only a few large sellers ◦ Identical or similar products ◦ Barriers to entry (others can’t enter market easily)  Start up costs  Gov’t regulation  Consumer loyalty ◦ Reduced risk

 Interdependent Pricing ◦ Price Leadership ◦ Price War  Collusion ◦ Illegal ◦ ***Cartels – illegal in U.S.  Sellers cannot differentiate product = incentive to coordinate  Typically short lived  De Beers, OPEC

 Four Types ◦ Natural – most efficient producer ◦ Geographic – profit limited to specific location ◦ Technological – create new product to change existing one (patents and copyrights) ◦ Government – gov’t is sole seller  Economies of scale  Limits ◦ Consumer Demand ◦ Potential Competition ◦ Government Regulation

 To what extent is OPEC a monopoly?  Why are some monopolies able to exist within the United States while others targeted by the U.S. regulators?

 Aim: Has the government regulated businesses and corporations effectively?  Homework: Study  Do Now: Finish work from yesterday