chapter 10 monopolistic competition, oligopoly & barriers to entry

8/7/2019 Chapter 10 Monopolistic Competition, Oligopoly & Barriers to Entry

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MANAGERIAL

ECONOMICS


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MONOPOLISTICCOMPETITION,

OLIGOPOLY &BARRIERS TO ENTRY


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PRESENTED BY -

Ali Zain Raza

Mavra Pervaiz

Faisal Arshad

Sehrish Qadir

Irum Rabeel

Aasfar Javed


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WHAT ARE MARKETS?

A market is where buyers and sellers:

meet to exchange goods and services

usually in exchange for money

The market may be in one specific place


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ESSENTIALS OF MARKET

Commodity fortransaction

Networkof buyers & sellers

Competition between buyers & sellers

Aplace orasituation fortransaction


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TYPES OF MARKET

PERFECT COMPETITION

MONOPOLISTIC COMPETITION

IMPERFECT COMPETITION

MONOPOLY

OLIGOPOLY


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MONOPOLISTIC

COMPETITION

Referstoamarketorganization

Fairly large numberof firmsSellingcloselyrelated butnot

homogenousproducts.


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OLIGOPOLY

In economics ,a situation in which few

companies control the major part of a particular

market


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Anothermarkettype thatstands betweenperfectcompetitionandmonopoly.

Oligopolyisamarkettype inwhich:

Asmall numberof firmscompete.

Natural or legal barrierspreventthe entryofnew

firms.


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FEATURESt..

Small no of firms

Interdependence

Advertising and selling costs

Group behavior


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SMALL NUMBER OF

FIRMS In contrast to monopolistic competition and perfect

competition, an oligopoly consists of a small number

of firms.

Each firm has a large market share

The firms are interdependent

The firms have an incentive to collude


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INTERDEPENDENCE

When a small number of firms compete in a market,

they are interdependent in the sense that the profit

earned by each firm depends on the firms own actions

and on the actions of the other firms.

Before making a decision, each firm must consider

how the other firms will react to its decision andinfluence its profit.


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TYPES OF OLIGOPOLY

Pure oligopoly-where sellers sell almost similar type

of product

Differentiated oligopoly-where firms are in the same

line of business but products may not be absolute

homogeneous


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EXAMPLES OF OLIGOPOL

Supermarkets

Banking industry

Chemicals

Oil

Medicinal drugs

Broadcasting


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IS OLIGOPOLY EFFICIENT?

In oligopoly, price usually exceeds marginal cost . So the

quantity produced is less than the efficient quantity.

Oligopoly suffers from the same source and type of

inefficiency as monopoly.

Because oligopoly is inefficient, antitrust laws and

regulations are used to try to reduce market power and

move the outcome closer to that of competition and

efficiency.


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CONCLUSION

chapter 10 monopolistic competition, oligopoly & barriers to entry

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