Market Structures

Vocabulary-style flashcards covering the definitions, characteristics, and examples of various market structures as discussed in the lecture notes.

Market structure

Describes the economic environment of an industry in which buyers and sellers operate, presenting the essential features and classification of market according to market power.

Competition

A rival system among several market suppliers.

Market

Any venue where trading of goods and services happens, composed of various suppliers and customers.

Market concentration

Determined by the number and size of buyers and sellers; more suppliers signify a less concentrated market, while fewer producers indicate a more concentrated market.

Homogenous products

Undifferentiated or same products that are very responsive to price changes.

Heterogenous products

Differentiated or unique products that are not responsive to price changes and can generate high market power.

Scale Barriers

Requirements for a large production plant for a feasible operation in the industry, involving significant capital and resources.

Legal Barriers

Proprietary rights such as patents, copyrights, and trademarks, or government requirements like licenses and permits that prevent entry of competitors.

Price-setters

Producers who can manipulate the level of supply or demand to control the price of products in the market.

Price-takers

Producers who cannot control the level of supply or demand and must embrace whatever the market price is.

Perfect Competition

An ideal market condition with many customers and suppliers, homogenous or highly standardized products, and ease of entry and exit.

Monopoly

A market structure where a single seller has control of the entire supply of raw materials and offers a particular item with no close substitute.

Meralco and Maynilad

Utility companies in the Philippines that operate as monopolists for electricity and water services.

Economy of scale

Savings derived from the production of a large range of outputs.

Monopolistic Competition

A market structure with many firms selling heterogenous or differentiated products that have similar basic functions but vary in brand, flavor, or packaging.

Oligopoly

A market structure composed of few firms that interact with each other and exhibit interdependence.

Collusion

The act of oligopolists working together to raise prices or fix output levels.

OPEC (Organization of Petroleum Exporting Countries)

An example of a cooperative behavior in an oligopoly taking the form of price-fixing or output-setting agreements.