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ADMS 1010 Study Guide - Investment Canada, Effective Competition, Imperfect Competition


Department
Administrative Studies
Course Code
ADMS 1010
Professor
Barry O' Brien

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ADMS 1010 Class 2
Perfect Competition
1. Many sellers of the product so that no individual seller produces a significant share
of the quantity available to the market.
2. All firms produce exactly the same product. The products of all firms are similar.
3. All buyers given full information about the market.
4. Productive resources are perfectly mobile
a. A market structure with at least 2 buyers and 2 sellers, but preferably more.
b. A mixture of large and small firms
c. No collision or cohesion among seller
5. Desirable Conditions for workable competition
a. A market structure with at least 2 buyers and 2 sellers, but preferably more.
b. A mixture of large and small firms
c. No collision or cohesion among sellers
d. All possible market info is available to buyers and sellers
e. No barriers to entry and exit
Cases (Eaton’s and Wine)
Imperfect Competition
It is an industry in which single firms have some control over the price of their
output ex. Monopoly, oligopoly, and monopolistic competition.
Market power is the imperfectly competitive firm’s ability to raise price
without losing all demand for its product.
Monopolies and Prices
Competition forces firms to adjust prices to the market
Monopoly allows firms to set prices
Oligopoly
Found initially on scale and scope elements of production and distribution
Secure by scale and scope distribution
Research marketing and development
Flexibility and innovation can falter in the face of the needs of the dominant
brand
The oil sands-energy needs
Giants can, however and do stagnate
Cases (Inco and Oil)
Oil industry has an early history of monopoly and a late of oligopoly
Product branding and create a entry barrier
Interdependent decision-making
Non prize competition (Service Based)
Vertical and horizontal integration
Car Buyer
Garage owners
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