Competition in Markets

Perfectly competitive markets are characterized by many well-informed buyers and sellers, identical products being sold, and easy access into and out of the market for sellers
Start-up costs and a need for technological training can present barriers to entry into some markets
Competition in perfectly competitive markets promotes efficient use of resources and the lowest possible prices
A monopoly is a market in which a single supplier provides a unique product to any number of buyers
Monopolies form when barriers prevent competitors from entering the market
Different market factors create different types of monopolies
The government is involved in creating and regulating monopolies
Monopolies may use price discrimination to increase sales
Monopolistic competition is a market characterized by many firms, few barriers to entry, little control over price, and differentiated products
Because distinctions can be made among goods sold in monopolistic competition, firms engage in non-price competition in addition to competing on price
An oligopoly is a market dominated by a few large, profitable firms that sell differentiated products and have some control over price
The government uses antitrust laws to regulate markets dominated by one or a few firms, to breakup monopolies, and to block mergers that can hurt competition
The government tries to promote competition and the greater choice that may accompany it
The government sometimes deregulates industries to promote competition.

Monopolies

Barriers to entry are the principle condition that allows monopolies to exist
Economists use a strict set of requirements to characterize a monopoly
- single seller
- barriers to entry
- unique product - the good or service supplied has no substitute
Different market conditions can create different types of monopolies
Economies of scale – characteristics that cause a producer’s average cost to drop as production rises
A average total cost curve without economies of scale will first fall, and then trend upward because the cost rises when output exceeds a certain level
With economies of scale, the average cost of production falls when the firm produces more. Because of this, the product has the potential to saturate the market
However, some business leaders are scaling down, not up. Disposable factories and disposable strategies are new keys to lowering costs and boosting performance

One firm provides all the output. If a second firm enters the market, competition will drive down the market price, quantity sold will decrease, and one or both firms will not be able to cover the cost and will go out of business
Example : public water

The law of demand states that buyers will demand more of a good at lower prices and less at higher prices. The law of demand means that when the monopolist increases the price, it will sell less, and when it lowers the price, it will sell more.

Perfectly competitive markets are characterized by many well-informed buyers and sellers, identical products being sold, and easy access into and out of the market for sellers
Start-up costs and a need for technological training can present barriers to entry into some markets
Competition in perfectly competitive markets promotes efficient use of resources and the lowest possible prices
A monopoly is a market in which a single supplier provides a unique product to any number of buyers
Monopolies form when barriers prevent competitors from entering the market
Different market factors create different types of monopolies
The government is involved in creating and regulating monopolies
Monopolies may use price discrimination to increase sales
Monopolistic competition is a market characterized by many firms, few barriers to entry, little control over price, and differentiated products
Because distinctions can be made among goods sold in monopolistic competition, firms engage in non-price competition in addition to competing on price
An oligopoly is a market dominated by a few large, profitable firms that sell differentiated products and have some control over price
The government uses antitrust laws to regulate markets dominated by one or a few firms, to breakup monopolies, and to block mergers that can hurt competition
The government tries to promote competition and the greater choice that may accompany it
The government sometimes deregulates industries to promote competition.

Barriers to entry are the principle condition that allows monopolies to exist
Economists use a strict set of requirements to characterize a monopoly
- single seller
- barriers to entry
- unique product - the good or service supplied has no substitute
Different market conditions can create different types of monopolies
Economies of scale – characteristics that cause a producer’s average cost to drop as production rises
A average total cost curve without economies of scale will first fall, and then trend upward because the cost rises when output exceeds a certain level
With economies of scale, the average cost of production falls when the firm produces more. Because of this, the product has the potential to saturate the market
However, some business leaders are scaling down, not up. Disposable factories and disposable strategies are new keys to lowering costs and boosting performance

One firm provides all the output. If a second firm enters the market, competition will drive down the market price, quantity sold will decrease, and one or both firms will not be able to cover the cost and will go out of business
Example : public water

The law of demand states that buyers will demand more of a good at lower prices and less at higher prices. The law of demand means that when the monopolist increases the price, it will sell less, and when it lowers the price, it will sell more.