Types of Competition Chapter 7. Perfect Competition Many sellers – Similar Products – dry...
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Transcript of Types of Competition Chapter 7. Perfect Competition Many sellers – Similar Products – dry...
Types of Competition
Chapter 7
Perfect Competition
Many sellers – Similar Products– dry cleaners– agriculture
Easy entryNo control over price – – market is controlled by supply and demand
Monopolistic Competition
Large number of sellers- Similar but slightly different products – toothpaste, clothing, cosmeticsRelatively Easy Entry some control over price – can raise prices without loss of customersNon-price competition– product differences– advertising
OligopolyAn industry dominated by a few suppliers that exercise some control over price.– Automobile industry – U.S. big three– cereal companies
Substantial barriers to entry – customer loyalty– excessive capital
Non – price competitionIdentical or slightly different productsLimited control over price- – any company can raise or lower its price but the
other competitors react.
Monopoly
Single seller
No Substitutes
Complete Control of the Market Price by controlling supply
No entry for competition
U.S. tries to prevent
Natural Monopoly
Due to high costs it is cost efficient to have only one provider Utilities- gas, electricity etc.