środa, 12 października 2022

Microeconomics wykład 2

MARKETS

Market Properties

De nition market:

- historically place

- Demands, supply, buyers, sellers, rules, products, etc…

Relevant market

- Product

- Location (local market, Polish market, Global market - how big is place where
competition take place)

PROPERTIES OF THE MARKET

1. Market structure (no. of buyers and no. of sellers)

a) One

One that dominates. There can be others, but one is dominates.

One seller >90% market shares.

Monopoly (one + many) = 1 seller + many bayers

b) Few

At least 2 subjects with signi cant market shares (oligopoly - few + many).

21% 19% 18% 14% (hundreds of others non signi cant)

Ex. Beer market

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c) Many

No one has signi cant market shares.

Ex. Hair-cutting services.

Polypoly (many + many)

d) Monopsony - many sellers and one buyer (many + one)

Ex. Local factory in small city with buys labour from workers.

e) Oligopsony - many sellers and few buyers (many + few)

Ex. Wheat (zboże) market

Many farmers sell wheat to few big halls which buy it.

f) Bilateral Oligopoly (few+few)

Market power

The market power of the seller is the highest in case of monopoly. (Publiczne
wodociągi)

The higher the market power of the seller, the higher the price.

The higher the market power of the buyer, the lower the price. (Monopsony.)

Transction mechanism:

a) Posted-prices method (mechanizm cen publikowanych)

Popular when there is many buyers/sellers

b) Auctions (competetive mechanism)

One seller and few buyers.

c) Reverse auctions (przetargi)

Few sellers and one buyer.

d) Barganing (targowanie się)

One seller and one buyer

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 2. Product di erentation

a) Homogeneous

No buyers preferences.

Market where only price matters.

Cost competition.

Ex. USD market

If seller o er product in the same or very similar price that should be homogeneous
market.

If some sets the market price for product its homogenous (potatoes etc.).

b) Heterogenous

Preferences concerning product/place/person

All competition strategies.

Ex. Shoes

Prices of shouse can be 40 or 400.

3. Transparency of the market (przejrzystość rynku)

Amount of information available.

Perfectly transparent market - market with complete amount of information.

Everyone know everything about everyone else. Of course they dont exsist.

The closest to perfectly transparent market are ekspert market.

Ex. Copper (miedź) market - (KGHM)

E cency

Transparency is the higher:

-> … the simpler is the product

-> … the less suppliers there are

-> … the more info is published

-> … the more regular are transactions

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 Transparent markets:

-> the same quality products traded at the same price

-> the higher the quality the higher the price

Non-transparent markets

Ex. Real Estate market in Wroclaw

- product is complicated

- Hughe number of suppliers

- Most of the informations are not published

- Not regular transactions

- Cost of information (using help of real estate agents)

Ex. Derivatives markets

When we can learn the true quality of the product?

a) before the purchase

b) After the purchase / during consumption

c) Never (ex. vaccinations, life Insurance, battery)

4. Entry/exit barriers

Labour markets - markets where Labour is traded.

Buyers are rms/sellers are workers

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