Competition. Modern market and competition. Market models (most important)

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Competition. Modern market and competition. Market models (most important)

Lecture notes, cheat sheets

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13. Modern market and competition. Market Models

The market and competition are largely synonymous: one does not exist without the other. When considering the main types of competition in relation to the market structure, we can distinguish four market models.

1. The market of pure (perfect) competition most accurately describes the interaction of supply and demand. It is typical for him:

1) in the struggle for the attention and money of buyers, many manufacturers of the same type, standardized goods face each other;

2) there are no barriers to entry into the industry and non-price competition;

3) competition develops without any restrictions, and market equilibrium is achieved as a result of mass transactions of sellers and buyers who cannot impose their will on each other and are forced to seek a compromise in the form of a market price.

2. Monopolistic competition market.

Monopolistic competition occurs when sellers offer similar products to buyers to satisfy the same need. This is a type of market situation in which the monopoly power of each firm extends only to the production of a particular variety of goods, but not to control over the market of all goods of the same type. Firms in such competition enter the industry relatively easily, with significant emphasis on advertising, trademarks, brands, etc.

3. Market of oligopolistic competition (oligopoly).

If some firms manage to come up with the most attractive varieties of goods or attract the largest number of buyers through low prices, they can eventually force out the rest of the less fortunate sellers from the market and become the masters of the market, competing only among themselves. In the market of oligopolistic competition, the ability of buyers to negotiate the best purchase conditions for themselves is even less than in the market of monopolistic competition, since almost all goods of a certain type are produced and offered for sale by only a few firms, and there is no one else to buy it from.

4. Pure monopoly market.

In such a market for the buyer, the worst conditions are formed. Under a pure monopoly, the buyer's ability to bargain becomes extremely limited, since there is no alternative manufacturer (seller). A huge share of products is produced by one enterprise - an absolute monopolist. The only method of the buyer's struggle with the omnipotence of the monopolist-manufacturer is not to buy the goods. But not always this method can be used. If the buyer cannot do without a commodity, he will be forced to buy it even at the cost of giving up other goods.

Author: Ilyina V.N.

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