Welcome TO ENTREP 2021
Welcome TO ENTREP 2021
Welcome TO ENTREP 2021
TO
ENTREP 2021
Objectives:
Market, a means by
which the exchange of
goods and services takes
place as a result of buyers
and sellers being in contact
with one another, either
directly or through
mediating agents or
institutions.
Markets in the most literal and
immediate sense are places in
which things are bought and
sold. In the modern industrial
system, however, the market is
not a place; it has expanded to
include the whole geographical
area in which sellers compete
with each other for customers
( Alfred Marshall, 1890)
Market structures provide a
starting point for assessing
economic environments in
business. An understanding of
how companies and markets
work allows business
professionals and leaders to
accurately judge industry and
market news, policy changes
and legislation and how the
economy .
What Are Market Structures?
Producers freely enter the market when profits are attractive. There is easy
entry and exit in monopolistic competition.
Oligopoly
An oligopoly is dominated by a few firms, resulting in limited competition. They can collaborate
with or compete against each other to use their collective market power to drive up prices and earn
more profit.
Entering into an oligopoly is difficult. The most powerful companies have control over raw
materials, patents and financial and physical resources that create barriers for potential entries. This is
what helps set high prices. However, if prices are too high, buyers will head to product substitutes in
the market.
Products may be homogenous or differentiated. Typically, there are three to five dominant firms,
but this number can vary depending on the market. For instance, video gaming consoles are an oligopoly
with three companies — Microsoft, Sony and Nintendo — dominating the market. Other examples of
oligopolies are the automobile and gasoline industries.
Pricing, profits and production levels change as the dynamic relationship between sellers and buyers
changes.
Pure Monopoly
10
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