1. Market Structures
4 Different Types

2. Perfect Competition Many sellers, identical goods and services –
Sellers can not set own price, MUST take price the market sets
Easy to enter and exit a market
All firms have same access to resources

3. Example
Does a banana differ in name, shape packaging depending on where you bought it?
Wheat?
Corn?

4. Monopolistic Competition
Many sellers
Similar but not identical products (packaging, advertising etc. can be different)
Some ability to set prices
Easy to enter and exit the market

5. Examples

6. Oligopoly Only a few LARGE sellers
Products can be identical or differentiated
LOTS of control in the market
Firms are very INTERDEPENDENT
The actions of one affect the rest
Barriers to entry: can be expensive, may need licenses, patents, limited resource access
Non Price Competition
Advertising, Packaging

7. Behaviors of Oligopolies

8. Monopoly Market with only 1 seller of a good or service No competition
No substitute goods
Barriers to entry: high cost of entering the market
Firms are “price makers” – they control the supply and so can influence the price they charge
Less efficient than a competitive market so have lower quantities available and higher prices

9. Natural Monopoly
This is a monopoly where it makes more sense – it is more efficient to have only 1 seller of a good or service
The cost of competition makes it too expensive and unprofitable to have more than 1 seller
Examples are utilities

10. Example