iiie section a economics notes perfect competition

Perfect Competition

Monopoly Monopolistic Competition

Oligopoly

Infinite buyers and sellers who are willing to supply and buy a product at a ceratin price.

Single seller There are many producers and many consumers in the market, and no business has total control over the market price

An oligopoly maximizes profits by producing where marginal revenue equals marginal costs

Zero entry and exit barriers – Easy to enter or exit the market

High Barriers to Entry

There are few barriers to entry and exit. Entry and exit:

Barriers to entry are high

Perfect factor mobility Price Discrimination

Consumers perceive that there are non-price differences among the competitors' products.

Oligopolies are price setters rather than price takers

Perfect information Price Maker Producers have a degree of control over price

"Few" – a "handful" of sellers.[3] There are so few firms that the actions of one firm can influence the actions of the other firms

Zero transaction costs Oligopolies can retain long run abnormal profits. High barriers of entry prevent sideline firms from entering market to capture excess profits

Profit maximization Profit Maximizer

Homogenous products Product may be homogeneous (steel) or differentiated

Non-increasing returns to scale

The distinctive feature of an oligopoly is interdependence

Property rights Non-Price Competition