market structure_ch12

Chapter 12 (P.107)Market & Market Structure

Meaning of market

Do you know what is a market? Does it only mean this?

NO

Meaning of market

Some “markets” Flower wholesale market in Mongkok Labour market Stock market Foreign exchange market

So what do people do in markets?

Meaning of market

Market exists when there are both buyers and sellers exist to do transactions

Is this a market?

Auctions in Yahoo!

no physical location both buyers and sellers

This is a market.

Types of competition

Types of competition The adjustment

in price are involving directly in the transaction process.

Price competition e.g. price war,

discounts

Types of competition

The other skills used in competing for customers in their business

Non-price competition e.g. brand names

Non-price competition

Examples: Advertising

Lucky Draw

Free packing, free delivery

Maintenance services

A day of Mr. Leung

A day of Mr. Leung

Group discussion

Here are some types of business Group them into a number of

groups you like 4 students in a group 5 minute discussion write down on the board your

groupings

Group discussion

Suggesting criteria Number of sellers in that market? If so, how they compete with

other competitors?

Types of market structure

Reports from groups There are differences in the

number of competitors in the markets

Types of market structure

with numerous sellers Monopolistic competition

Types of market structure

with some large/dominant sellers Oligopoly

Types of market structure

with one seller only Monopoly

Market structure Meaning of a market

Function of a market

-Factors affecting -Factors affecting the degree of the degree of competition among competition among sellers (and sellers (and buyers) of an buyers) of an industryindustry

- Classification of - Classification of an industry into an industry into different market different market structurestructure

-Factors affecting -Factors affecting the degree of the degree of competition among competition among sellers (and sellers (and buyers) of an buyers) of an industryindustry

- Classification of - Classification of an industry into an industry into different market different market structurestructure

Main themes

Summary table Imperfect competition

Perfect competition

Monopolistic competition

Oligopoly Monopoly

No. of sellers

Many Many A few Only one

Nature of product

Homogeneous Differentiated or heterogeneous

Differentiated or heterogeneous

Homogeneous or differentiated

Ease of entry

Free Free Restricted Restricted

Market information

Perfect Imperfect

Pricing behaviour

Price taker - Each firm is

too small to affect the market price

- Each firm can only take the market price

- Ineffective non-price competition

Price searcher - Each firm has some market power to affect the

market price - Non-price competition is common