The Four Market Structures - Perfect Competition

PERFECT COMPETITION

Perfect competition is an industry in which

• There are many buyers and sellers
• Firms sell identical (homogenous) products
• Firms have no market power
• Firms in perfect competition are price takers
• There are no barriers to entry into the industry
• Established firms have advantages over new ones
• Sellers and buyers are well informed about prices

Case Study - Horse Betting

When placing bets, consumers can just look down to see who is offering the best odds. Thus, no one bookie can offer worst odds than those being offered by the market as a whole, since consumers will just go to another bookie. This make the bookies price-takers.

Furthermore, the product on is very homogenous, with the only differences between individual bets being the pay-off and the horse. Of course, there are not an infinite amount of bookies, and some barriers to entry exist, such as a license and the capital required to set up.

Countries That Practices Horse Betting

The United States of America 

Australia

France

Germany

Russia

RESOURCES

1. http://www.economicsonline.co.uk/Business_economics/Perfect_competition.html
2. http://www.investopedia.com/terms/p/perfectcompetition.asp

The Four Market Structures - Monopoly

Monopoly 

What is monopoly?

A pure monopoly is an industry with a single firm that produces a product that has no close substitutes and in which there are many firms of barriers to entry.

Do you know there has few types of barriers to entry in monopoly?

·Patents/ Copyrights

-Legal restrictions that prevent other firms from entering the market to produce the same product.

· Economic of scale

-The large scale of operation provides the advantage of having a lower cost of production.

· Government  directive

-It is a consequence of imposition of regulation by government that makes entry of new firms unattractive.

 

Tenaga National Berhad is the largest power company in Southern Asia. It is also the only one and the largest electric utility company in Malaysia. 

 

KTM is the main rail operator in Peninsular Malaysia. It is wholly owned by the government Malaysia. 

Telekom Malaysia is the largest integrated solutions provider in Malaysia. It offers a range of communication services and solutions in broadband, data and fixed-line.

· Large initial investment 

-Purchases with a large modal to set up new initial facilities and also lead to high cost for the firm.

Resources: http://www.econlib.org/library/Enc/Monopoly.html 
          http://answers.reference.com/information/terminology   /what_is_monopoly_in_economics