1. Market Structure

2. Perfect Competition 1. There are many buyers and sellers
2. Firms produce a standardized product or commodity
3.buyers informed about price, quality, availability
4. Firms easily enter or exit industry
Ex. stock

3. Monopoly Sole supplier of a product with no close substitutes
Market Power- ability of a firm to raise price without losing sales
High barriers to entry
Legal Restrictions
Economies of Scale
Control of Essential Resources
May not earn a profit
True Monopolies are Rare
Demand supply chart is Market Demand

4. Problems with Monopolies
Resources wasted securing monopoly privilege
Monopolies may grow inefficient

5. Good of Monopolies Economies of Scale Government Regulation
Keeping prices low to avoid regulation
Keeping prices low to prevent competition

6. Monopolistic Competition
Each firm has market power
Product Differentiation
Physical Differences
Location
Services
Product Image
Costs of Production- Marketing

7. Oligopoly Market dominated by a few firms Barriers to entry
Economies of Scale
High Cost of Entry
Product Differentiation costs
Cartel- a group of firms that agrees to act as a single monopoly to increase profits
Collusion- agreement among firms to divide market and fix price

8. Antitrust US Antitrust activity
Promote market structure to increase competition
Reduce anticompetitive behavior
Antitrust laws
FTC
Mergers –combination of two or more firms to form a single firm
Horizontal mergers
Nonhorizontal mergers
Flexible merger policy

10. Regulation of Natural Monopolies
Public Interest
Special Interest

11. Competitive trends in the US economy
Antitrust Activity
Microsoft web browser
Deregulation
Get rid of regulation
Airline deregulation Act
International Trade
GM adjusting prices for competition
Technological Change
Online companies