Sit Hung, Winnie

(s980427)

Law Chi Hang, Jarvis

(s981093)

Chei Wing Yee, Aggie

(s981747)

Group 10 [ Major: Economics ]

Concept TourConcept Tour

Perfect Competition完 全 競 爭

Monopoly壟 斷

Oligopoly寡 頭 壟 斷

Monopolistic Competition壟 斷 性 競 爭

Imperfect Competition不 完 全 競 爭

Market Structure 市 場 結 構

Market 市 場

What is a “MARKET” ?

What is a “MARKET” ?In Economics, a Market is defined as a context in which exchange of goods and services between sellers and buyers takes place.

A Market exists whenever a transaction is made.

Four features:

1. Large No. of Buyers & Sellers

2. Homogeneous Products

3. Free Entry & Exit

4. Perfect Market Information

Large No. of Buyers & Sellers

• the action of an individual buyer or seller is unable to affect the market price

Buyers Sellers

Homogeneous Products

• the products in the market must be identical in the eyes of consumers

Free Entry and Exit

• Firms are free to entry or leave the market

Welcome toPerfectly Competitive Market

Exit!!Entry!!

Perfect Market Information

• Buyers & Sellers know all market information about goods e.g.

Price Quality Quantity

Example:

• The stock exchange is a close example

Four Features:

• 1. Large No. of Buyers & Sellers

• 2. Differentiated Products

• 3. Free Entry & Exit

• 4. Imperfect Market Information

Same as P.C.

Same as P.C.

Product Differentiation

• A firm can use product differentiation to promote sales.

Techniques are:•new designs•advertising•branding

Imperfect Information of the Market

• Sellers & Buyers don’t have perfect info. on price & quality of goods

Example:

• Rice is an example

Four features:

1. A Few Dominant Sellers

2. Similar but Differentiated Products

3. Entry is Restricted

4. Imperfect Market Information

Same as P.C. & M.C.

Few dominant sellers• Oligopolies has to consider the reactions

of other firms before making any decision

• price rigidity• price leadership• non-price competition

• Market behavior:

Similar but Differentiate Products

• the products are close substitutes to one another

Entry is Restricted

• it is difficult because of government regulation/huge capital/technological requirements

Imperfectly Competitive MarketEntry?

Examples

Same as M.C. & O.

Four Features:

1. Only One seller in the whole market

2. No close subsitiute

3. Highly Difficult (even impossible) to Entry

4. Imperfect (highly restricted) Market Information

Only One Seller in the Whole Market

• buyers can obtain the goods or services from monopoly only

No Close Substitutes

• buyers are difficult to find another goods to satisfy the same want

Highly Difficult (even impossible) to entry• it is because of monopoly power

Sources of Monopoly Power• government ownership• government franchise• ownership of important resources• huge capital requirement• economies of scale

No Entry!!

• Examples

Monopoly Oligopoly Monopolistic Perfect

Competition Competition

1. No. of sellers

2. No. of buyers

3. Products nature

4. Ease of entry

5. Information availability

One

Many

No close substitute

Forbidden Restricted

RestrictedRestricted

Easy to enter

Perfect Information

Many Many Many

Easy to obtain

Free entry

Heterogeneous Heterogeneous Homogeneous

A few dominant sellers

Many Many