Counter Parts Oligopoly
-
Upload
sami-moghbel -
Category
Business
-
view
1.512 -
download
0
description
Transcript of Counter Parts Oligopoly
![Page 1: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/1.jpg)
Counter PartsOligopoly
Deep, Johanne, Sami
![Page 2: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/2.jpg)
Nature of Our Market
Between Free Competition and Monopoly
![Page 3: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/3.jpg)
Free Competition
Characteristics: • Many firms competing
• Demand is perfectly elastic
• Firms are competing at the same price
![Page 4: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/4.jpg)
Free Competition
![Page 5: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/5.jpg)
Free Competition
![Page 6: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/6.jpg)
Free Competition
![Page 7: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/7.jpg)
Free Competition
![Page 8: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/8.jpg)
Free Competition
![Page 9: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/9.jpg)
Free Competition
![Page 10: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/10.jpg)
Free Competition
![Page 11: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/11.jpg)
Free Competition
![Page 12: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/12.jpg)
Free Competition
![Page 13: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/13.jpg)
Monopoly
Characteristics: • One firm that dominates the market
• Demand is almost perfectly inelastic
• Ability to change the price to anything
![Page 14: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/14.jpg)
Monopoly
![Page 15: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/15.jpg)
Monopoly
![Page 16: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/16.jpg)
Monopoly
![Page 17: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/17.jpg)
Monopoly
![Page 18: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/18.jpg)
Monopoly
![Page 19: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/19.jpg)
Monopoly
![Page 20: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/20.jpg)
Monopoly
![Page 21: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/21.jpg)
Monopoly
![Page 22: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/22.jpg)
Monopoly
![Page 23: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/23.jpg)
Nature of Our Market
Characteristics: • Dominated by few producers
• Demand is in between elastic and inelastic
• High level market concentration
![Page 24: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/24.jpg)
Oligopoly
![Page 25: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/25.jpg)
Oligopoly
![Page 26: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/26.jpg)
Oligpoly
![Page 27: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/27.jpg)
Oligopoly
![Page 28: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/28.jpg)
Oligopoly
![Page 29: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/29.jpg)
Oligopoly
![Page 30: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/30.jpg)
Oligopoly
![Page 31: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/31.jpg)
Oligopoly
![Page 32: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/32.jpg)
Oligopoly
![Page 33: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/33.jpg)
Oligopoly
![Page 34: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/34.jpg)
Types of Oligopolies
• Perfect oligopoly: Few firms produce an identical
product• Imperfect oligopoly: Few firms differentiate in their
products • Duopoly: Only two firms in the industry
• Collusive & Non-Collusive: Joining or not joining with
rivals
![Page 35: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/35.jpg)
Nature of Our Market
Characteristics: • Product Branding: Selling differentiated product, to
appear as if there are unique features • Entry Barriers: Prevents dilution of competition,
maintains supernormal profits • Interdependent Decision Making: Know reactions of
rivals (the happenings of a rival affect your firm)• • Non-price Competition: Competitive strategies other
than reducing prices
![Page 36: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/36.jpg)
Entry Barriers
• Barriers to Entry: Obstacles that keep a firm from entering the market
• Very High
• Huge firms able to heighten it through advertising
and branding • Allows firms to make supernormal profits
• Entering firms don't have scale benefits, High efficent
firms left with little competitiors•
![Page 37: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/37.jpg)
Non- Price Competition
• Quality and Innovation: Differentiating its product creating demand more inelastic for each product
• With more differentiation, there is more control over
prices • Enchancing Perceived value: Improving how
consumers look at a product. Ex. packaging, design, brand image.
![Page 38: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/38.jpg)
Kinked Demand Curve
![Page 39: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/39.jpg)
Kinked Demand Curve
![Page 40: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/40.jpg)
Kinked Demand Curve
![Page 41: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/41.jpg)
Kinked Demand Curve
![Page 42: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/42.jpg)
Kinked Demand Curve
![Page 43: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/43.jpg)
Kinked Demand Curve
![Page 44: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/44.jpg)
Kinked Demand Curve
![Page 45: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/45.jpg)
Kinked Demand Curve
![Page 46: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/46.jpg)
Kinked Demand Curve
![Page 47: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/47.jpg)
Kinked Demand Curve
![Page 48: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/48.jpg)
Kinked Demand Curve
![Page 49: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/49.jpg)
Kinked Demand Curve
![Page 50: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/50.jpg)
Kinked Demand Curve
![Page 51: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/51.jpg)
Kinked Demand Curve
![Page 52: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/52.jpg)
Kinked Demand Curve
• Demand curve - elastic and inelastic
• Firms do not move from price to price
• Increase in price, no one follows - fall in revenue
• Reduce in price, everyone follows - fall in revenue
• Two MR curves are needed for two demand curves
• MC Curves in inelastic demand - no price change
• MC Curves in elastic demand - P & Q changes.
![Page 53: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/53.jpg)
Determining Costs
• Find where MR=MC • Go straight to the y-axis (Price)
• Cost of product determined
![Page 54: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/54.jpg)
Determining Costs
![Page 55: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/55.jpg)
Determining Revenue
• Revenue depends on price and elasticity of demand • Bigger market = more revenue
• Quantity x Price at MR=MC
• (Kinked Curve) Change in price decreases revenue
![Page 56: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/56.jpg)
Determining Profit
• To maximize profit, go to point MR=MC • Price determined on demand curve
• Unit cost on the total cost curve
• Equate price and marginal cost
• (Mutual interdependence) Firm's profit depends on price and
sales of rivals
![Page 57: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/57.jpg)
Positives
• Price set by Markets • Firms are in competition with each other
• Scale Benefits
• Ability of Merging
![Page 58: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/58.jpg)
Negatives
• High costs = Lowering potential output • Interdependant on each firm
• Collusion - Usually setting Prices
![Page 59: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/59.jpg)
Why Are We Succesful?
• Products highly demanded
• Ability to control output and price
• High Entry Barriers - Lower Competition
• Few Firms - Influential
![Page 60: Counter Parts Oligopoly](https://reader034.fdocuments.in/reader034/viewer/2022051514/54be0e364a7959d76a8b456b/html5/thumbnails/60.jpg)
Summary
• Between free competition and monopoly • Few large firms
• Large barriers for entry
• More on non-price, interdependant on other firms
• Theory - use of the kinked curve (once price is set)
• An inefficent market structure