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50-handout-1 - 5/23/2010 Market Structure Conduct and...

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5/23/2010 1 Market Structure Conduct and Performance Revising for A2 Economics Questions on Markets What is market structure? • Market structure is the organisational and other characteristics of a market • We tend to focus on those characteristics of a market which affect the degree of competition between firms and their pricing decisions • Traditionally we emphasise: 1. The number and size distribution of buyers and sellers 2. The existence or absence of barriers to entry and exit
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5/23/2010 2 Structural characteristics of a market The number of firms and the extent of overseas competition (e.g. from within the EU single market or in global markets) The market share of the largest businesses (as measured by the concentration ratio) The nature of costs in the short and long run (e.g. economies of scale) The degree to which an industry is vertically integrated up and down the supply chain (e.g. forward and backward vertical integration) The extent and success of product differentiation / product branding Price and cross price elasticity of demand The number and size of buyers of the industry’s product The turnover of customers from one seller to another (also called “market churn”) – this is affected by brand loyalty and the effects of
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This note was uploaded on 02/08/2012 for the course ECO 51844 taught by Professor Sabet during the Spring '11 term at FIU.

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50-handout-1 - 5/23/2010 Market Structure Conduct and...

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