Competition in Economics Competition in Economics Abstract models and reality.
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Transcript of Competition in Economics Competition in Economics Abstract models and reality.
![Page 1: Competition in Economics Competition in Economics Abstract models and reality.](https://reader036.fdocuments.in/reader036/viewer/2022082701/5515c4a5550346a3758b47ee/html5/thumbnails/1.jpg)
Competition in EconomicsCompetition in Economics
Abstract models and realityAbstract models and reality
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Spectrum of competitionSpectrum of competitionPerfect competitionPerfect competition
Tiny firmsTiny firmsPrice takersPrice takersIdentical productsIdentical productsOnly normal profitOnly normal profit
Prod. & Alloc. Prod. & Alloc. efficiencyefficiency
MonopolyMonopoly
Single supplierSingle supplierSets p or q.Sets p or q.Price above cost?Price above cost?Abnormal profitAbnormal profit
Inefficiency?Inefficiency?
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Imperfection, e.g. OligopolyImperfection, e.g. Oligopoly
Major & minor playersMajor & minor players
High concentration ratioHigh concentration ratio
DifferentiationDifferentiation
InterdependenceInterdependence
Fierce competition?Fierce competition?
Collusion?Collusion?
Contestable?Contestable?
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Competitive advantageCompetitive advantage
Definition:Definition:
– A distinctive feature that A distinctive feature that makes a business successfulmakes a business successful
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InnovationInnovationPRODUCTPRODUCT
NewNew
LatestLatest
BestBest
PROCESSPROCESS
Costs cutCosts cut
QualityQuality
FocusFocus
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ReputationReputation
Word of mouthWord of mouth
BrandsBrands
MarketingMarketing
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RelationshipsRelationships
TrustTrust
ValueValue
InertiaInertia
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Cost leadershipCost leadership
Process innovationProcess innovation
Economies of scaleEconomies of scale
Technical efficiencyTechnical efficiency
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DifferentiationDifferentiation
Product innovationProduct innovation
Reputation/qualityReputation/quality
MarketingMarketing
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FocusFocus
Matching requirementsMatching requirements
Niche?Niche?
Customise?Customise?
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Barriers to entry/exitBarriers to entry/exit
Natural:Natural:
High start-up costsHigh start-up costs
Sunk costsSunk costs
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Barriers to entry/exitBarriers to entry/exit
Artificial:Artificial:
PatentsPatents
Marketing budgetsMarketing budgets
Brand proliferationBrand proliferation
Predatory behaviourPredatory behaviour
Supply chain controlSupply chain control