CONTEMPORARY ECONOMIC ISSUES FACING THE FILIPINO ENTREPRENEUR

Market Structure

Refers to the competetive environment in which buyers and sellers operate

Competition

Is the rivalry among various sellers in the market

Market

Is a situation of diffused, impersonal competition among sellers who compete to sell their goods and among buyers who use their purchasing power to acquire the available goods in the market

Perfect Competition

• The market has a lot of independent sellers

• Sellers offer the same goods

• Each seller is trying to compete to get more profit than the others

Characteristics

• Rise and fall of market price depends on total supply and demand

• Easy for new firms to enter and leave

• There is no competition that does not include prices.

Monopolistic Competition

There is almost a large number of sellers selling goods that are similar but not the same

Monopolistic Competition Characteristics

1. There are many seller acting independently.

2. Products are not all the same. There are different commercials and billboards for them.

Example: banks, books, gasoline stations

3.There is limited control of price. Sellers can decrease or increase prices a little.

4. New firms do not have a very hard time entering the market. They need capital. Need to promote their products so will people will their goods.

5. There is more non-price competition. Provide better services and better places to sell

OLIGOPOLY

Describes a market that is dominated by only a small number of firms. Resulted to limited competition. They can compete each other or collaborate. They can use their collective market power to drive up prices and earn more profit.

OLIGOPOLY Characteristics

1. Only some firms are powerful in the market

2. Products are either the same or different.

3. Oligopolies can set price.

4. It is hard for new firms to enter the market. It is hard to beat the firms that have been in the market longer because these firms know better.

5. Products may be homogenous or differentiated

Oligopoly typically consists of about 3-5 dominant firms'

Monopoly

Exist when a single firm that sells in the market has no close substitutes.

MONOPOLY CHARACTERISTICS

1. There is only one producer or seller

2. Not all products are exactly the same

3. Monopolist chooses the price

4. It is very hard for new firms to enter the market

5. There may or may not be a lot of promotion of the goods

Determinants of Market Structure

1. Government Laws and Policies
2. Technology
3. Business Policies and Practices
4. Economic Freedom

1. Government Laws and Policies

The government controls the entry of firms.

2. Technology

Some new firms get hold of modern machines which help them produce more goods compared to monopolies

3. Business Policies and Practices

new firms might be scared of big firms. Big firms can even buy the new firms.

4. Economic Freedom

Firms can compete with one another. Firms try to beat one another. Only few stay in the market.