Chapter 25(10)

Chapter 25(10) - Chapter 25 (10): Oligopoly Market...

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Chapter 25 (10): Oligopoly Market Structure There are two basic determinants of a market structure: 1. The number of firms in a product’s market. 2. The relative size of firms in this market (market concentration). Monopoly and perfect competition are two types of market structure. The higher the number of the firm and smaller the relative size of the individual firm , the closer the market is to perfect competition and vice versa. Monopoly has one firm with one product. Between those two market structures, there are many degrees of market power . To sort these degrees out, we classify firms into five market structures: perfect competition, monopolistic competition, oligopoly, duopoly and monopoly. If we exclude perfect competition , we call the other four structures imperfectly competitive . Under imperfect competition, the firm in a particular market has some degree of market power over prices because of its differentiated product or its size relative to the overall market (or both). Oligopoly is a market structure that yields a market power primarily because there are a few firms controlling most of the output in the market. These firms could produce homogenous product (example: the steel industry) or heterogeneous product (the airline industry). In the long distance telephone service market, there are 800 firms supply this
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This note was uploaded on 01/12/2012 for the course ECON 201 taught by Professor Joyce during the Fall '07 term at Drexel.

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Chapter 25(10) - Chapter 25 (10): Oligopoly Market...

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