Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 81 views

    Market Structures - Part 3: Advantages Disadvantages Perfect Competition

    Uploaded by

    kriston khan
    The document discusses ways to control monopolies including nationalization, legislation and regulations, and price ceilings. It also compares the advantages and disadvantages of different market structures: perfect competition has efficiency but no economies of scale; monopolistic competition has variety but wasteful advertising; oligopolies can achieve economies of scale but collude; and monopolies achieve scale but exploit consumers with high prices and less innovation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Market Structures - Part 3: Advantages Disadvantages Perfect Competition

    Uploaded by

    kriston khan
    81 views3 pages
    The document discusses ways to control monopolies including nationalization, legislation and regulations, and price ceilings. It also compares the advantages and disadvantages of different market structures: perfect competition has efficiency but no economies of scale; monopolistic competition has variety but wasteful advertising; oligopolies can achieve economies of scale but collude; and monopolies achieve scale but exploit consumers with high prices and less innovation.

    Original Title

    econ 12

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses ways to control monopolies including nationalization, legislation and regulations, and price ceilings. It also compares the advantages and disadvantages of different market structures: perfect competition has efficiency but no economies of scale; monopolistic competition has variety but wasteful advertising; oligopolies can achieve economies of scale but collude; and monopolies achieve scale but exploit consumers with high prices and less innovation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    81 views3 pages

    Market Structures - Part 3: Advantages Disadvantages Perfect Competition

    Uploaded by

    kriston khan
    The document discusses ways to control monopolies including nationalization, legislation and regulations, and price ceilings. It also compares the advantages and disadvantages of different market structures: perfect competition has efficiency but no economies of scale; monopolistic competition has variety but wasteful advertising; oligopolies can achieve economies of scale but collude; and monopolies achieve scale but exploit consumers with high prices and less innovation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Market Structures – part 3

    Ways to control a monopoly:


     Nationalization – government buying the monopoly from the private sector,
    so that it (the government) can choose prices and output levels that benefit
    society.
     Legislation (laws) and regulations (rules) and taxes – all designed to restrict
    how much the monopoly can grow or how much it can exploit consumers.
     Price ceilings (maximum price) – designed to limit the high prices that a
    monopoly can charge.

    Advantages and disadvantages of each market structure


    Advantages Disadvantages
    Perfect  Efficiency  No economies of
    Competition  Lower prices scale
     Consumer sovereignty  No abnormal profits
     No money spent on in the long run
    advertising because  No research &
    there is perfect development
    knowledge. (because there aren’t
     No firm has monopoly enough profits to pay
    power for it)

    Monopolistic  Greater consumer  No efficiency


    Competition choice (variety of  Money is spent on
    goods and services to advertising, thus cost
    choose from) of production
     There is innovation, as increases
    firms compete with  There might be
    each other to make wastage e.g. too
    better products much packaging for a
     No firm has monopoly simple product
    power  No abnormal profits
     Advertising gives in the long run
    consumers more  No research &
    knowledge about development
    products (because there aren’t
    profits to pay for
    them)
     Advertising can be
    misleading
    Oligopoly  Economies of scale  No efficiency
     They can afford to pay  They can collude and
    for research & form cartels which
    development have monopoly
     Abnormal profits in power
    both the short run  Less variety for
    and long run consumers
     Prices can be stable  Higher prices
    since the firms won’t because there is less
    easily deviate from competition
    what is already being
    charged (the price at
    the bend or kink)
     More tax revenue for
    the government
    Monopoly  Economies of scale  Exploitation of
     They can pay for consumers by
    research & charging higher
    development prices and producing
     They can pay for new less output
    technology  Customer service
     Abnormal profits in might not be the best
    both the short run  Quality of the
    and long run product might not be
     More tax revenue for the best
    the government  Price discrimination
    (charging different
    prices to different
    consumers)
     Unfair trade practices
    to block other firms
    from entering the
    market (such as
    predatory pricing).
     Inequality of wealth,
    since the monopolist
    gets wealthier at the
    expense of
    customers
     No efficiency
     Potential for
    diseconomies of
    scale if it expands too
    much
     Less motivation to be
    innovative
     No choice/variety for
    consumers
     Monopolies might
    gain political
    influence

    You might also like