WHAT IS COMPETITION What is competition in the

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WHAT IS COMPETITION? What is competition in the marketplace? • Competition among buyers can

WHAT IS COMPETITION? What is competition in the marketplace? • Competition among buyers can happen when there is more than one business selling the same or similar item. They are competing for customers. • Where do you go to lunch? • Apple vs. Samsung

HOW DO BUSINESSES COMPETE Lowering Prices Better Products –Product Differentiation Better Customer Service Incentives

HOW DO BUSINESSES COMPETE Lowering Prices Better Products –Product Differentiation Better Customer Service Incentives • Buy 1 Get 1 Free Advertising

MONOPOLIES • Monopoly – electric companies 1. 2. 3. 4. A Single Seller No

MONOPOLIES • Monopoly – electric companies 1. 2. 3. 4. A Single Seller No Substitutes No Entry – Barriers to entry are impossible Almost Complete Control of the Market • Types of monopolies • • Natural- utilities Geographic- Alaskan village Technological- inventions/patents Government- construction of roads

OLIGOPOLY Industry dominated by several suppliers who exercise some control over price 1. 2.

OLIGOPOLY Industry dominated by several suppliers who exercise some control over price 1. 2. 3. 4. 5. Dominated by a few sellers Barriers to Entry Identical or Slightly different prodcuts Nonprice competition Interdependence Auto Industry or airline travel

MONOPOLISTIC COMPETITION MOST COMMON IN THE US 1. Numerous Sellers 2. Relatively Easy Entry

MONOPOLISTIC COMPETITION MOST COMMON IN THE US 1. Numerous Sellers 2. Relatively Easy Entry 3. Differentiated Products 4. Price Competition 5. Some control over price Restaurants are a good example

MERGERS Horizontal merger • Is when companies offering the same good or service merge

MERGERS Horizontal merger • Is when companies offering the same good or service merge • Often competitors offering the same good or service • If Coke and Pepsi merged • US airlines merged with American airlines Why?

• Vertical merger • Is when companies operating in the same industry but

• Vertical merger • Is when companies operating in the same industry but sale different good or services merge. • If a car manufacturer and a parts manufacturer merged • In 2012 Google bought Motorolla to compete with Apple • Last year Apple bought Beats to control the music streaming industry

Conglomerate Merger • Combines firm's that are unrelated or in different industries. • GE

Conglomerate Merger • Combines firm's that are unrelated or in different industries. • GE started by Thomas Edison in 1890 as a lighting company. Now operates in sectors such as air, water, oil, gas, electric and aviation, just to name a few.