MARKET STRUCTURES: (7.1 in text)
The following are different types of market structures we analyzed:
Pure Competition: Five conditions exist in a purely competitive market: 1) there are a large number of buyers and sellers, 2) dealing in identical products, 3) buyers/sellers are free to enter into or get out of the market at any time, 4) buyers/sellers act independently, and 5) buyers/sellers need to be reasonably well informed about items for sale.
Monopolistic Competition: Same conditions as pure competition except for product differentiation (dealing in similar, but not identical products)
Oligopolies: A type of business in which there are several producers, but a few in that type of business tend to dominate sales.
Monopolies: A type of business where there is only one producer of a product, with no competition and no close substitutes.
There are four types of monopolies: natural, geographic, technological and government monopolies
Monopolistic Competition: Same conditions as pure competition except for product differentiation (dealing in similar, but not identical products)
Oligopolies: A type of business in which there are several producers, but a few in that type of business tend to dominate sales.
Monopolies: A type of business where there is only one producer of a product, with no competition and no close substitutes.
There are four types of monopolies: natural, geographic, technological and government monopolies
"Back in the day"... During the late 1800s we saw the rise of big business; it was a time of the robber barons. A trust is a legal combination of a business. In 1890, Congress passed the Sherman Anti-Trust Act to break up monopolies, or these illegally formed trusts. The Standard Oil Co (Rockefeller) was the first to be broken up by this act in 1911.
President Theodore Roosevelt was known as a 'trust buster'.
Market Success - Markets work best when four conditions are met:
1) There is adequate competition in the market place.
2) Buyers and sellers are well-informed.
3) Resources need to be able to move about - to where they are needed.
4) Prices must also be reasonable, and reflect cost of production (no price gouging).
Markets fail when these conditions are not met, or we have to rely on the government to provide services that we can't adequately provide ourselves (such as national defense, water/sewer, etc)
Regulatory agencies are created by the government that are established by legislative act in order to set standards in a specific field of activity, or operations, in the private sector of the economy and to then enforce those standards. A few examples of agencies are shown below: