Market Structure

ECW2731 Weeks 7 & 8
Weeks 7 & 8
Competition, market structures and business decisions
Examination structure
ECW2731 Weeks 7 & 8
1. Exam duration
120 minutes writing time
2. Reading time
3. Total number of questions
10 minutes
5
4. Students must attempt all questions 5. Use of calculators is permitted
Please note, original hand written notes or computer printouts or photocopies are not permitted in the exam this year.
Examination structure
ECW2731 Weeks 7 & 8
Section 1. (Microeconomic theory from the Managerial Perspective) attempt

Q 1-4
Four theoretical questions. May include discussion of examples. Brief answers are expected including definitions and diagrams where approporiated and/or specifically asked for.
Section 2. (Research Question) attempt only one question 5 or 6

5. Discuss possible impact of the introduction of carbon emission trading scheme in Australia on the following industries: Electricity generation Car manufacturing and import Tourism and hospitality Forestry
6. Apply question 5 to any country of your choice.
ECW2731 Weeks 7 & 8
Structure
Weeks 7-8 Competition, market structures and business decisions Week 9 Pricing strategies and practices Week 10 Business and Government.
Weeks 5 - 6 Production and Costs
Weeks 3-4 Demand analysis and estimation Week 2 Basic economics principles: demand and supply.
Week 11 Capital budgeting
Managerial Economics
Week. 12 Research question Business and current economic situation.
Week1 Introduction. The nature of managerial economic decision making
ECW2731 Weeks 7 & 8
Competition, market structures and business decisions Learning objectives
What is the market Structure How does competition affect business decisions in different market structures? Perfect competition; monopoly; oligopoly; monopolistic competition Competitive strategies. Measurement of market structures Market strategies in different market structures. Non-price competition. Multinational companies. Vertical and horizontal coordination.

ECW2731 Weeks 7 & 8
Reading
Hirschey, Chapters 10, 12, 13, & 14
ECW2731 Weeks 7 & 8
Table 10.1 Characteristics of Market Types
Market structure
Examples
Number of producers
Type of product
Power of Barriers firm over to entry price
Non-price competition
Perfect competition Monopolistic competition
Parts of agriculture are reasonably close
Many
Standardized
None
Low
None Advertising and product differentiation Advertising and product differentiation Advertising
Retail trade
Many
Differentiated
Some
Low
Oligopoly
Computers, oil, steel
Few
Standardized or differentiated
Some
High
Monopoly
Public utilities
One
Unique product
ConsiderVery high able

ECW2731 Weeks 7 & 8
Market structures
What is the market structure?

The competitive environment in the market for any product is the market structure faced by the firm
Is measured in terms of
the number of the actual buyers and sellers plus potential entrants Barriers to entry and exit Capital requirements Price vs Non-price competition Etc
Potential entrants pose a sufficiently credible threat of entry to affect price/output decisions of incumbents

ECW2731 Weeks 7 & 8
Market structures
Factors that Shape the Competitive Environment

Product Differentiation
R&D, innovation, and advertising are important in many markets.
Production Methods
Economies of scale can preclude small-firm size.
Entry and Exit Conditions

Barriers to entry and exit can shelter incumbents from potential entrants.
Buyer Power
Powerful buyers can limit seller power.

ECW2731 Weeks 7 & 8
Market structures
The firm in competitive markets
Non-perfect competition
Perfect competition
Monopoly Oligopoly Monopolistic competition

ECW2731 Weeks 7 & 8
Market structures
Perfect competition competitive markets
Profit maximiser Identical product Very small share of the market Price-taker Produces a homogeneous product Perfect information No barriers to entry (legal, technological, or resource) No technical progress No investment lag - Immediate implementation of production decisions) Homogeneous goals of the owners and managerial staff

ECW2731 Weeks 7 & 8
Market structures
Examples of Competitive Markets

Agricultural commodities. Some prominent markets for intermediate goods and services. Unskilled labor market.

ECW2731 Weeks 7 & 8
Market structures
Profit Maximization Imperative

Normal profit is return necessary to attract and maintain capital investment. Efficient firms can earn normal profit. Inefficient firms suffer losses.
Role of Marginal Analysis

Set M = MR MC = 0 to maximize profits. MR=MC when profits are maximized.
ECW2731 Weeks 7 & 8
Profit maximization in a perfectly competitive market
(see book)
P = MC
Marginal cost curve left of shutdown level (min. variable cost) is supply curve P = MR = MC = AC Firm produces at minimum of average costs! (optimal outcome for industry) In a constant-cost industry increase in supply will lead in the long term to constant prices (i.e. horizontal supply curve)
14

ECW2731 Weeks 7 & 8
Market structures
Marginal Cost and Firm Supply

Short-run Firm Supply
Competitive market price (P) is shown as a horizontal line because P=MR. Firms marginal-cost curve shows the amount of output the firm would be willing to supply at any market price. Marginal cost curve is the short-run supply curve so long as P > AVC .

ECW2731 Weeks 7 & 8
Market structures
Long-run Firm Supply

Marginal cost curve is the long-run supply curve so long as P > ATC. In long run, firm must cover all necessary costs of production and earn a normal profit.

ECW2731 Weeks 7 & 8
Market structures
Long Run Normal Profit Equilibrium

With a horizontal market demand curve, MR=P.
P=MR=MC=ATC.
There are no economic profits. All firms earn a normal rate of return.
Competition, market structures and business decisions Perfect competition Market structures ECW2731
Weeks 7 & 8
Breakeven point Price, cost per unit MC
Ppeak
Poff peak
Poff peak break even price off peak. At this ATC price the firm expects AVC to return only variable costs and can produce quantity Qoff peak Ppeak- break even price at peak. This is when the firm expects to return both fixed and variable costs producing quantity Qpeak
Qoff peak
Output per time period
Q peak

ECW2731 Weeks 7 & 8
Market structures
Competitive Market Supply Curve

Market Supply With a Fixed Number of Competitors Supply is the sum of competitor output.
Market Supply With Entry and Exit

Entry results in more firms, increased output, a rightward shift in the supply curve, and drives down prices and profits. Exit reduces the number of firms, decreases the quantity of output, shifts the supply curve leftward, and allows prices and profits to rise for remaining competitors.
Competition, market structures and business decisions Perfect competition Market structures ECW2731
Weeks 7 & 8
Market price determination

Negatively sloped demand curve Positively sloped supply unit ($) 10 curve
Price per
Supply
8 6 4
P = $0.254 + $0.000025 Q
P = $40 $0.0001 Q 2 Demand 0 50 100 150 200 250 300 350 400 Quantity per time period (millions)
ECW2731 Weeks 7 & 8
Competition, market structures and business decisions Monopoly Market structures
Basic Properties
One firm in industry Profit-maximiser Faces market demand curve One product No close substitutes
Price-maker No restrictions on resources
Blockaded entry and/or exit Imperfect dissemination of information Opportunity for economic profits in long-run equilibrium.
ECW2731 Weeks 7 & 8
Examples of Monopoly Electricity utilities, Gas Water Public Tramsport Telecommunications
ECW2731 Weeks 7 & 8
Monopoly graph
23
ECW2731 Weeks 7 & 8
Profit Maximization in Monopoly Markets

Price/Output Decisions A monopoly firm is the market. Market and firm demand curve slopes downward. Monopoly demand curve is always above the marginal revenue curve, P = AR > MR. Monopoly position allows above-normal profits. P > AC in long-run equilibrium.
Set M = MR - MC = 0 to maximize profits.

MR=MC at optimal output.
ECW2731 Weeks 7 & 8
Social Costs of Monopoly

Monopoly Underproduction Monopolists produce too little output. Monopolists charge prices that are too high. Deadweight Loss from Monopoly Monopoly markets creates a loss in social welfare due to the decline in mutually beneficial trade activity. There is also a wealth transfer problem associated with monopoly. Under monopoly, consumer surplus is transferred to producer surplus.
ECW2731 Weeks 7 & 8
Social Benefits From Monopoly

Economies of Scale Monopoly is sometimes the natural result of vigorous competitive forces. In natural monopoly, LRAC declines continuously and one firm is most efficient. Some real-world monopolies are government-created or government-maintained. Invention and Innovation Public policy sometimes confers explicit monopoly rights to spur productivity.
ECW2731 Weeks 7 & 8
Monopoly Regulation
Dilemma of Natural Monopoly Monopoly has the potential for efficiency. Unregulated monopoly can lead to economic profits and underproduction. ECW3830 COMPETITION AND REGULATION
ECW2731 Weeks 7 & 8
Monopolists produce less, price higher than firms in competitive equilibrium

MR = P(1 + 1/h)
Situation is inefficient, insofar as the sum of consumer and producer surplus is concerned
What is producer and consumer surplus?
Monopolist has to take demand conditions explicitly into account Why is no other firm entering the market??? 28
ECW2731 Weeks 7 & 8
Other aspects of monopoly
Natural monopoly if minimum of average cost occurs only at very high output level (minimum efficient scale) ==> there is only place for one firm in the market! Measure of monopoly power (markup of price over cost):
P MC markup MC
29
ECW2731 Weeks 7 & 8
Sources of monopoly power

Natural monopoly (public utilities best example, railway tracks), economies of scale, Capital requirements on production or big sunk costs on entry Patents (17 years), trade secrets (Coke) Exclusive or unique assets (minerals, talent)
Locational advantage (popcorn shop in cinema but in general you pay rent for these advantages)
Regulation (TV, taxi, telephone in the past) Collusion by competitors
30
Competition, market structures and business decisions In the real life Market structures ECW2731
Weeks 7 & 8
A real firm in a market place (compare to the ideal one):

A typical firm, if it is not a small one, is not owner-managed Separation of ownership, long-term strategic and short-run current control (shareholders, board of directors, brunch managers) implies the segregation of objectives; Natural, economic and legal barriers Diversification (non-homogenous product, more than one kind of activity) Technical progress Different criteria for different time horizons (short-run operation vs long-run planning. Price-making Price/marketing strategies Imperfect information Investment lag
ECW2731 Weeks 7 & 8
Sources of monopoly power

Natural monopoly (public utilities best example, railway tracks), economies of scale, Capital requirements on production or big sunk costs on entry Patents (17 years), trade secrets (Coke) Exclusive or unique assets (minerals, talent)
Locational advantage (popcorn shop in cinema but in general you pay rent for these advantages)
Regulation (TV, taxi, telephone in the past) Collusion by competitors
34
ECW2731 Weeks 7 & 8
What can a monopolist do? Erect strategic entry barriers

Excessive patenting and copyright
Limit pricing (set price below monopoly price) Extensive advertising to create brand name to raise cost of entry Create intentionally excess capacity as a warning for a price war 35
ECW2731 Weeks 7 & 8
Franchising McFood
A Franchiser (mother company) gets a fixed percentage of sales, The franchisee is the residual claimant What are the incentives for the two partners? Other problems like number of shops in a region
Other examples??
36
ECW2731 Weeks 7 & 8
37

ECW2731 Weeks 7 & 8
Market structures
Oligopoly and Monopolistic Competition
Contrast Between Monopolistic Competition and Oligopoly

Monopolistic Competition Large number of sellers that offer differentiated products. Normal profit opportunity in long-run equilibrium. Oligopoly
Few sellers.
Economic profits are possible in long-run equilibrium. Dynamic Nature of Competition
Timely market structure information managerial investment decisions
is
required
for

ECW2731 Weeks 7 & 8
Market structures
onopolistic competition
The market consists of n mono-product firms; The products are viewed by the buyers as close though not perfect substitutes for one another; Therefore, each of the sellers is a monopolist of its particular product variant with a limited degree of monopoly power. Such a monopolist is enjoying a monopoly power and making economic profit during only a short period of time from the introduction of an unique product or technology until such a technology becomes available to rivals, or until a new more innovative product is introduced by a rival.

ECW2731 Weeks 7 & 8
Market structures
Price Costs
MC
AC
Pmc
MR
Demand
Qmc
Quantity
Short-run Monopoly Equilibrium Monopolistically competitive firms take full advantage of short-run monopoly.

ECW2731 Weeks 7 & 8
Market structures
Price Costs
MC
AC
Price Costs
MC
AC
Pmc
D2
MR2 MR1
D1 MR
D Qmc Quantity
Quantity
Entry of new firms offering product substitutes shifts the demand and MR curves)
Long-run equilibrium same costs, lower demand and excess capacity low output high price decision With differentiated products, P=AC at a point above minimum LRAC. P > MR = MC.

ECW2731 Weeks 7 & 8
Market structures
Price Costs
MC
AC
Price Costs
MC
AC
Pm Pacc D2 MR2 MR1 D1 MR Qmc Qac
D
Quantity
Quantity
Long-run equilibrium same costs, lower demand and excess capacity low output high price decision With differentiated products, P=AC at a point above minimum LRAC. P > MR = MC.
Long-run equilibrium high output low price decision (corresponds to perfect Competition) With homogenous products, P=AC at minimum LRAC. This is a competitive market equilibrium with homogeneous production.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Oligopoly Market Characteristics Few sellers. Homogenous or unique products. Blockaded entry and exit. Imperfect dissemination of information. Opportunity for above-normal (economic) profits in long-run equilibrium. Examples of Oligopoly National markets for aluminum, cigarettes, electrical equipment, filmed entertainment, ready-to-eat cereals, etc.
Local retail markets for gasoline, food, specialized services, etc.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Cartels and Collusion

Overt and Covert Agreements Cartels operate under formal agreements. Powerful cartels function as a monopoly. Collusion exists agreements. Enforcement Problem Cartels are typically rather short-lived because coordination problems often lead to cheating. Cartel subversion can be extremely profitable. when firms reach secret, covert
Detecting the source of secret price concessions can be extremely difficult.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Cartels and Collusion

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Oligopoly Output-Setting Models

Cournot Oligopoly Cournot equilibrium output is found by simultaneously solving output-reaction curves for both competitors. Cournot equilibrium output exceeds monopoly output but is less than competitive output.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Stackelberg Oligopoly
Stackelberg model posits a first-mover advantage.
Price wars severely undermine profitability for both leading and following firms. Price signaling can reduce uncertainty in oligopoly markets.
Price leadership occurs when firms follow the industry leaders pricing policy.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Stackelberg Oligopoly
Price leader sets the price at P2 Profit is maximised at Q1. The follower(s) will supply the combined output of Q4-Q1 At P3- Follows will supply everything At P1 the leader will supply everything at no economic profit

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Oligopoly Price-Setting Models

Bertrand Oligopoly: Identical Products
The Bertrand model focuses upon the price reactions. The Bertrand model predicts a competitive market price/output solution in oligopoly markets with identical products.

ECW2731 Weeks 7 & 8
Market structures
Oligipoly
Oligopoly Price-Setting Models

Bertrand Oligopoly: Identical Products
The Bertrand model focuses upon the price reactions. The Bertrand model predicts a competitive market price/output solution in oligopoly markets with identical products.

ECW2731 Weeks 7 & 8
Market structures
Game Theory Basics
Types of Games
Zero-sum game: offsetting gains/losses. Positive sum game: potential for mutual gain. Negative-sum game: potential for mutual loss. Cooperative games: joint action is favored.
Role of Interdependence
Sequential games: moves in succession. Simultaneous-move game: coincident moves.
Strategic Considerations

ECW2731 Weeks 7 & 8
Market structures
Game Theory Basics
Prisoners Dilemma
Classic Riddle
Rational behavior can give suboptimal result. Rationality can hamper beneficial cooperation.
Business Application
Dominant strategy gives best result regardless of moves by other players. Secure strategy gives best result assuming the worst possible scenario.
Broad Implications

ECW2731 Weeks 7 & 8
Market structures
Game Theory Basics
Nash Equilibrium
Nash Equilibrium Concept
Neither player can improve their payoff through a unilateral change in strategy. Nash equilibrium concept is broader than the concept of a dominant strategy equilibrium. Every dominant strategy equilibrium is also a Nash equilibrium. Nash equilibrium can exist where there is no dominant strategy equilibrium.
Nash Bargaining

ECW2731 Weeks 7 & 8
Market structures
Game Theory Basics
Infinitely Repeated Games

Role of Reputation
Infinitely repeated games occur over and over again without boundary or limit. Firms receive sequential payoffs that shape current and future strategies. Reputations for high quality give consumers confidence for repeat transactions.
Product Quality Games

In a one-shot game, poor quality can fool customers. In an infinitely repeated game, poor quality is shunned by customers.

ECW2731 Weeks 7 & 8
Market structures
Game Theory Basics
Finitely Repeated Games

Uncertain Final Period
Finitely repeated games have limited duration. With end point uncertainty, a finitely repeated game mirrors an infinitely repeated game.
End-of-game Problem
Enforcing end-of-game performance is difficult. Solution: simply extend the game!
First-mover Advantages
Benefits earned by the player able to make the initial move in a sequential move or multistage game.

ECW2731 Weeks 7 & 8
Competitive strategies in Imperfectly competitive markets
Not all industries offer the same potential for sustained profitability;
Not all firms are equally capable of exploring the profit potential that is available. An effective competitive strategy in imperfectly competitive markets must be founded on the firms competitive advantage.

ECW2731 Weeks 7 & 8
A competitive advantage is a unique or rare ability to create, distribute or service valued by customers. It is a business-world analogue to what economists call comparative advantage or when one nation or region of the country is better suited to the production of one product than to the production of some other product
Above-normal rate of return require a competitive advantage that cannot easily be copied In production; In distribution; or
In marketing

ECW2731 Weeks 7 & 8
Reasons for competitive advantage:
Access to a unique resource
(Exclusive) Access to a mineral deposit
(Exclusive) Access to a material

Efficient energy source Unique climatic condition Unique technology Unique (specially qualified or very talented) labour force; or A university bookshop The rice market in Japan etc
Access to a unique market


ECW2731 Weeks 7 & 8
Non-price competition. Product differentiation
Product differentiation
refers to the increase in time of the number of product categories suppled and the number of items in each category
Historically, a step from oligopolistic to monopolistic competition

ECW2731 Weeks 7 & 8
Non-price competition. Product differentiation
A simple model of the reason for product differentiation Price

Considers constant quantity as well as nonchanging AC and MC corresponding to this quantity Producing a little bit different product a firm might hope to charge a higher price
P*
Quantity

ECW2731 Weeks 7 & 8
Non-price competition. Barriers to entry
Price
Absolute cost advantages: Ability of established firms to produce any given level of output at lower unit costs than potential entrants
P* P
LAC*
LAC
Q* Q
Quantity

ECW2731 Weeks 7 & 8
Economies of scale:
Price LAC
Ability of established firms * To produce any given level of output greater than a certain level Q* at lower unit costs and * To restrict potential entrants who are not able to invest in that level of production
P D
Q*
Quantity

ECW2731 Weeks 7 & 8
Product differentiation advantages:
Price LAC
Variety of demand curves and common LAC.

Some firms have advantage of technology or specialisation and are facing demand curves to the right of the critical one.
P*
D1
D2
D2 Q* Quantity

ECW2731 Weeks 7 & 8
Non-profit-maximising competition.
Appear as the result of

Ability to affect prices and Separation of ownership and managerial control
* Managers aim
at stability and increase in salaries *Stability may be achieved through the increase in the scale of operations *Increase in sales (not in profit) affects managers remuneration * Banks and retailers would prefer to deal with firms increasing the volume of sales

ECW2731 Weeks 7 & 8
P, Cost
MC
AC
MR
D Q
Profit maximising decision

ECW2731 Weeks 7 & 8
P, Cost
Increasing sales, the firm is moving to the right and downward the demand curve and, therefore, decreases price, The limitation is AC curve. Some profit should be earned anyway
MR
D Q
Sales maximising decision

ECW2731 Weeks 7 & 8
P, Cost
MC
AC
MR
D Q

ECW2731 Weeks 7 & 8
P, Cost
MC
Old sales maximising decision is a profit maximising decision at a new level of average cost
AC
MR
D Q
Old profit maximising decision
New profit maximising decision

ECW2731 Weeks 7 & 8
Measurement of market structures Seller concentration
Seller concentration
refers to the degree to which production for a particular market or or in a particular industry is concentrated in the hand of few large firms
Measurement of concentration
number of firms in the market size distribution of firms in the market

ECW2731 Weeks 7 & 8
The Australian Bureau of Statistics
8140.0.55.001 Industry Concentration Statistics

ECW2731 Weeks 7 & 8
C2542 - Paint Manufacturing in Australia

KEY COMPETITORS (www.ibisworld.com.au/static/iwabout/SamIndPart.asp)
MAJOR PLAYERS
Table: Market Share Major Player
Market Share Range
Orica Limited 22.00% - 25.00% (2004) Wattyl Limited 17.00% - 19.00% (2004) Barloworld Australia Pty Limited 9.00% - 11.00% (2004)
Akzo Nobel Industries Limited
7.00% - 9.00% (2003)

ECW2731 Weeks 7 & 8
T e firm in th in u try a s rte h s e d s re o d a c rd g to th s e o th ir o tp t. c o in e iz f e u u X i - th o tp t o th firm e u u f e X

X i X
th o tp t o in u try e u u f d s
- th s a o th firmin th in u try e h re f e e d s o tp t u u T e ra h tio o r la e t firm in th in u try f g s s e d s o tp t u u

X X X X C i 1 2 r ... r X X X i 1 X
r
ECW2731 Weeks 7 & 8
Census Measures of Market Concentration
Concentration Ratios
Group market share data are called concentration ratios. CRi = Xi, where Xi is market share of the ith leading firm. CRi = 100 for monopoly. CRi 0 for a perfectly competitive industry.
Herfindahl-Hirschmann Index
Calculated in percentage terms, the HHI is the sum of squared market shares for all competitors. HHI = Xi2, where Xi2 is squared market share of the ith firm. HHI = 10,000 for monopoly. HHI 0 for a perfectly competitive industry.
Limitations of Census Information

Slow reports hinder usefulness. National statistics obscure local markets.

ECW2731 Weeks 7 & 8
Diagrammatic approach 100%

Cumulative % of output The curve of real (not equal distribution The curve of equal distribution of shares of the market among firms This distance measures concentration
No of firms cumulated from the largest

ECW2731 Weeks 7 & 8
Multinational companies. Vertical and horizontal coordination.
Diversification
Vertical coordination
Multinational company

ECW2731 Weeks 7 & 8
Multinational companies. Vertical and horizontal coordination. Diversification
Invest in production facilities to produce a product D
A firm X producing a good A
Buys shares of a firm Y producing a good B
Invents a new product C

ECW2731 Weeks 7 & 8
Multinational companies. Vertical and horizontal coordination. Vertical coordination

ECW2731 Weeks 7 & 8
Invest in production facilities or buys shares of or coordinate activities with a firm producing an input D

ECW2731 Weeks 7 & 8
Invest in facilities or buys shares of or coordinate activities with a firm providing professional training for employees

ECW2731 Weeks 7 & 8
Invest in production facilities or buys shares of or coordinate activities with a firm using A as an input A firm X producing a good A

ECW2731 Weeks 7 & 8
Invest in production facilities or buys shares of or coordinate activities with a firm using A as an input A firm X producing a good A
Invest in or buys shares of or coordinate activities with a firm specialising in the selling of product A

ECW2731 Weeks 7 & 8
Multinational companies. Vertical and horizontal coordination. Multinational company
Undertake vertical coordination measures abroad

A firm producing a good A in a home country Conduct diversification practices abroad
Establishes branches in other countries
Buys share of analogous firms in other countries

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ECW2731 Weeks 7 & 8

Competition, market structures and business decisions

120 minutes writing time

4. Students must attempt all questions 5. Use of calculators is permitted

Section 1. (Microeconomic theory from the Managerial Perspective) attempt

Section 2. (Research Question) attempt only one question 5 or 6

ECW2731 Weeks 7 & 8

Weeks 5 - 6 Production and Costs

Week 11 Capital budgeting

Week1 Introduction. The nature of managerial economic decision making

ECW2731 Weeks 7 & 8

Competition, market structures and business decisions Learning objectives

Competition, market structures and business decisions

Hirschey, Chapters 10, 12, 13, & 14

ECW2731 Weeks 7 & 8

Table 10.1 Characteristics of Market Types

Power of Barriers firm over to entry price

Perfect competition Monopolistic competition

Parts of agriculture are reasonably close

Computers, oil, steel

ConsiderVery high able

Competition, market structures and business decisions

What is the market structure?

Competition, market structures and business decisions

Factors that Shape the Competitive Environment

Entry and Exit Conditions

Competition, market structures and business decisions

The firm in competitive markets

Monopoly Oligopoly Monopolistic competition

Competition, market structures and business decisions

Perfect competition competitive markets

Competition, market structures and business decisions

Perfect competition competitive markets

Examples of Competitive Markets

Competition, market structures and business decisions

Perfect competition competitive markets

Profit Maximization Imperative

Role of Marginal Analysis

ECW2731 Weeks 7 & 8

Profit maximization in a perfectly competitive market

Competition, market structures and business decisions

Perfect competition competitive markets

Marginal Cost and Firm Supply

Competition, market structures and business decisions

Perfect competition competitive markets

Long-run Firm Supply

Competition, market structures and business decisions

Perfect competition competitive markets

Long Run Normal Profit Equilibrium

Breakeven point Price, cost per unit MC

Competition, market structures and business decisions

Perfect competition competitive markets

Competitive Market Supply Curve

Market Supply With Entry and Exit

Market price determination

ECW2731 Weeks 7 & 8

Competition, market structures and business decisions Monopoly Market structures

Price-maker No restrictions on resources

ECW2731 Weeks 7 & 8