http:// copyright 2003 – biz/ed competition in markets vce business
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http://www.bized.ac.uk
Copyright 2003 – Biz/ed
Competition in Markets
VCE Business
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Copyright 2003 – Biz/ed
Market Structures
• firms operate in markets, these are structured differently
• we can look at three different types of market structure and find examples of each:– monopoly– duopoly– oligopoly
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Monopoly
• a market structure where there is a single seller of a unique product
• no competition, as the firm = the market
• potential for abuse of monopoly position• the market may be a natural monopoly
– having competition amongst firms in this kind of market would be costly
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Example of Monopoly
• there may be significant savings to be had from having one company running the market
• Network Rail are responsible for the maintenance and upgrading of the UK rail network
• is it safer to have one company in charge?
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Duopoly
• two large producers or sellers• exactly two equally dominant firms
seldom found• tend to compete or collude
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Example of Duopoly
• global aircraft market• two dominant firms are Airbus and
Boeing• how do they compete with each
other?
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Oligopoly
• markets dominated by a small number of large firms
• the most common types of market• large firms are involved in selling
either identical or very similar products
• significant barriers to entry into the industry
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Example of Oligopoly
• the personal and domestic care product markets
• dominated by:– Unilever– Procter and Gamble– Colgate-Palmolive