Let me get this straight... the notes stated that there are 4 types market structure: Oligopoly, Monopoly, Perfect Competition and Monopolistic Competition. And of the 4 choices we have, none are perfect:) great... The basic thing i got from my notes are that either we get screwed by a single big money spinner or we get screwed by a thousand small firms. Either ways, it aint working out for us.
The only monopoly that i can think of as the best example is none other then Microsoft. Which is, ironically, the program EVERY SINGAPOREAN teacher use to type out our wonderful notes, teaching us about the demerits of a Monopoly whilst patronising one themselves * talk about irony*. Well, im not a complainer:( after all i'd positively die without Microsoft word and Powerpoint and all the other wonderful crap that comes with my MICROSOFT STUDENT PACKAGE. All im saying is that i wish it wasn't so bloody expensive. I mean... if like half the world buys it from you, you could have the decency to charge us a little cheaper? And if Mr Bill Gates is earning more then he can spend( making supernormal profit like nobody's business), is'nt it and indication of over charging? If we live in an ideal world, a monopoly like Microsoft can benefit socially if they actually passed on their savings, from enjoying Economies of Scale, to us mere slaves to their great addictive power. But alas, such a world do not exist and we wake up to the smell of reality and all its profit driven people.
Fret not dears:) if 1 firm has too great a power, maybe the next might entice you. How about having many many many firms. Welcome to the world of Perfect Competion( even though it doesn't exist in our world noe...much )*taaadaaa*. In this world, the market is shared by so many firms that you'd much rather count the hairs on your head. They all sell similar goods and in the end, they will only earn NORMAL PROFIT due to its high competitiveness. Due to its small size, they are price takers and have freedom of entry and exit even. But Don't be too happy...apparently...it is possible for a market to be able to achieve allocative and productive efficiency and not be perfect as well. Apparently, the lack of EOS is a cause of worry cos this means a lack of cost savings and that the consumers aka US have to pay a higher price for it. Drats. But as the name suggests, this is probably the closest we'll get to a PERFECT market:)
Ok, so too little is no good and too many is not good either. Why not just have a few? Well dears, let me introduce to you Mr. OLIGOPOLY who is actually just a few large firms dominating the market. The kinky demand curved sire seldom vary his prices unless costs change significantly. Due to him having a few GREAT competition, price competition has to be avoided at all costs cos in the end, the casualty can only be him. So instead, he makes use of his powers to try to trick people into thinking that he is different from the rest out there and doing his best to prevent new sires from entering the market. And if more competition threatens... a cartel is all but garanteed ( as they say, there is only a fine line separating friend and enemies alike. )
And lastly, the wonders of MONOPOLISTIC COMPETITION... the surreal like market where differences in products can be real or IMAGINED. Cool... NORTS. Although its great cos supposingly it reduces other firm's incentive to rip us off yet allowing each firm some sort of false power in making pricing decisions. Also, these differentiated products means that WE have got a choice, relatively lower prices, closer substitutes and creates more jobs in the advertising and product development!!! now isn't that wonderful??? NOOO obviously not cos this market is not only allocative and productive inefficient, but also causes the company to waste money through advertising and wastage of resources.
Whoever said that studying was fun. This has been quite a depressing thing study about how people behind big mahogany desks on the top floor of an office building have been growing fat ripping us off till they die of choronic heart diseases. Owells... life sucks eitherways:)
"You leave me SPEECHLESS, when you talk to me."
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Once upon a time...there was a girl who looks like a girl that was borned to a couple who was a girl and a boy together. Leaving their girl's name to the
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