SUBJECT- BUSINESS ECONOMICS

PROJECT REPORT ON DIFFERENT MARKETS

MADE BY-

 RUTUJA PATIL (Roll No: PM2123-E293, DIV-C)

 BHAVIKA BHAGTANI (Roll No: PF2123-E307, DIV-C)
 ANSHUL JAIN (Roll No: PF2123-E290, DIV-C)
 Inderpreet Singh Hundal (Roll No: PF2123-E317, DIV-C)
 ANURAG MALI (Roll No: PF2123-E299, DIV-C)

PERFECT COMPETITION

Perfect competition describes a market structure where competition is at its greatest possible
level. To make it more clear, a market which exhibits the following characteristics in its
structure is said to show perfect competition:

1. Large number of buyers and sellers

2. Homogenous product is produced by every firm
3. Free entry and exit of firms
4. Zero advertising cost
5. Consumers have perfect knowledge about the market and are well aware of any changes in
the market. Consumers indulge in rational decision making.
6. No government intervention
STARBUCKS

Starbucks being a great example of perfect competition as satisfying all the characteristics of
perfect
The graph above illustrates what would happen if Starbucks would have decreased their price
for their products. As you can see there is no change since Starbucks is a part of perfect
competition market and does not have control over the prices.

MONOPOLISTIC COMPETITION

Monopolistic competition characterizes an industry in which many firms offer products or

services that are similar, but not perfect substitutes. Barriers to entry and exit in
a monopolistic competitive industry are low, and the decisions of any one firm do not
directly affect those of its competitors. It is closely related to the business strategy of brand
differentiation.

Characteristics of it are as follows-

1) A large number of sellers and buyers- Like the perfect competition, monopolistic
competition also consists of a large number of sellers and buyers. That means several sellers
are selling the same product in the market. However, the product sold by each firm serves the
same purpose, but the products don’t need to be identical. The products sold by each firm are
differentiated based on different factors like brand, shape, size, etc.

2) Freedom of entry and exit- In monopolistic competition, each firm has the freedom to
enter and exit the market. There is little control of the government on the monopolistic
competition, so the competition is high

.3) More elastic demand- The demand for products in monopolistic competition is quite

flexible. There might be more demand for products sold by one seller and low demand for
similar products sold by another seller.
4) Advertising -Heavy advertising of products is done in Monopolistic competition. In
monopolistic competition, products produced by different sellers are not identical. They come
in different sizes, shapes, and different prices.

Example of monopolistic competition- The Fast Food companies like the McDonald and
Burger King who sells the burger in the market are the most common type of example of
monopolistic competition. The two companies mentioned above sell an almost similar type of
products but are not the substitute of each other. Now which product the particular consumer
likes the most and of which company totally depends on him. Apart from the burger, other
products are also sold by these companies like French fries soft drinks, etc. All these products
of the mentioned companies are of similar nature but there is no congruency between the
products sold by the two as each one has a slightly different shape and taste. This is the
monopolistic structure.

OLIGOPOLY MARKET

An Oligopoly is a market where in a market or an industry are dominated by a small group of

large sellers.

Some Characteristics of this market are as follows-

1) Few Firms- Under this market there are a few large firms. There is a severe competition
since each firm produces a significant portion of total products.

2) Barriers to entry- Under this market a firm can produce super normal profits since there
are barriers to entry like patents, licensing etc.

3) Non-Price Competition- Firms try to avoid non price competition due to fear of price
wars in this market and hence depends on non-price methods.

OLIGOPOLY IN AUTOMOBILE INDUSTRIES

1) Few domestic automobile industries are-Tata Motors, Hindustan Motors, San Motors,
Mahindra Motors.
2) Foreign Automobile Industries in India are- BMW India, Ford India, General Motors
India, and Hyundai Motors India.

PRICE LEADERSHIP MODEL- There is an intense competition among each company

MONOPOLY

A monopoly is a firm who is the sole seller of its product, and where there are no close
substitutes. The market structure is characterized by a single seller who is selling a unique
product in the market. In a monopoly market the seller faces no competition as he is the sole
seller of goods with no close substitute.

CHARACTERISTICS OF MONOPOLY:

1. Single Supplier

The essence of a monopoly is a market controlled by a single seller. The single seller is a
direct contrast to perfect competitions which have a large number of sellers. The most
important aspect of being a single seller is that the monopoly seller IS the market. The market
demand for a good IS the demand for the output produced by the monopoly. This makes
monopoly a price maker, rather than a price taker.

2. No Close Substitutes:
There shall not be any close substitutes for the product sold by the monopolist. The cross
elasticity of demand between the product of the monopolist and others must be negligible or
zero.

3. Difficulty of Entry of New Firms:

There are either natural or artificial restrictions on the entry of firms into the industry, even
when the firm is making abnormal profits.

Example of monopolistic Industries: Railways

Public services like the railways are provided by the government. Hence, they are a
monopolist in the sense that new partners or privately held Companies are not allowed to run
railways. However, the price of the tickets is reasonable so that public transport can be used
by the majority of people.

Few more examples of the monopolistic markets are:

Netflix, Amazon, Alibaba, Apple, Nike, Microsoft as they are the major players in the world
market.