Economics 1: Principles of

Economics (with Taxation

and Land Reform)
LECTURE 5:
 Lecture 5:
Market Structure

The Market

-A market is a place where buyers and sellers meet

-Any place where buyers and sellers argue to

determine the price of a good

-A geographical area where a number of potential

customers for a product or service exists
 Lecture 5:
Market Structure

Kinds of Market Structure

Market structure can be classified according to the following:

1. Perfect Market

a. Pure or Perfect Competition. This is a market

situation where there are many sellers selling similar
kinds of products or services
 Lecture 5:
Market Structure
Kinds of Market Structure (continuation)
2. Imperfect Market
a. Monopolistic Competition. This is similar to pure
competition. However, brand names are used to
convince the buyers to buy the products or services,
which are different from another in terms of quality and
style
b. Oligopoly. This is a market situation where there are
few sellers or firms that dominate the market
c. Monopoly. This is a market situation where there is
only one seller selling a unique kind of goods or services
 Lecture 5:
Market Structure

Oligopoly
- comes from the Greek word oligo which means “few”
and polein which means “to sell”

Types of Organization of Oligopoly

1. Cartel – formal agreement among oligopolists to set up
a monopoly price, allocate output, and share profit
among members. Example: Organization of Petroleum
Exporting Countries (OPEC)

OPEC is an intergovernmental organization of 12

developing countries and its main goal is to coordinate
and unify petroleum policies among member countries
 Lecture 5:
Market Structure

2. Collusion – is a formal or informal agreement among

oligopolists to adopt policies that will restrict or reduce
level of competition in the market

Monopoly
- comes from the Greek word monos which means “one”
and polein which means “to sell”

Classification of Monopoly

3. Natural Monopoly. It is a market situation where single

firm can supply the entire market due to the fundamental cost
structure of the industry
 Lecture 5:
Market Structure
2. Legal Monopoly. Sometimes called “de jure monopoly”. It is
a form of monopoly which the government grants to a private
individual or firm over the product or service
3. Coercive Monopoly. It is a form of monopoly whose
existence as the sole producer and distributor of goods and
services is by means of coercion (legal or illegal).

Monopsony
-is a market situation where there is only one buyer of goods
and services in the market

Oligopsony
-is a market situation where there is a small number of buyers
 Lecture 5:
Market Structure
Characteristics of Market Structure
Market Classifications of Barriers to Examples
No. of Seller
Structure Product Entry

Pure
Many Homogeneous Very Easy Sugar, coffee, etc
Competition

Toothpaste,
Monopolistic Closely related
Many Easy lotion, bath soap,
Competition but differentiated
etc
Refrigerators,
microwave oven,
Oligopoly Few Standardized Difficult
washing machine,
etc

Very
Monopoly One Unique NAPOCOR
Difficult
 Lecture 5:
Market Structure

What is Marketing?
Marketing is an exchange between parties of either
product, service or an idea to satisfy a need or a want
through a system.

Marketing is also providing goods and services to

customers to meet their needs and wants while earning
a profit for the seller.

Marketing should not be mistaken as the market or

palengke, but rather as a system.
 Lecture 5:
Market Structure

Five Ps of Marketing
1. Product (Goods or Services). Products can be tangible
(real products) and intangible (services).

2. Price. This refers to “how much?” the goods or services

are

3. Place. Place where to distribute the products. Two modes

for traditional path of goods:
Consumer Goods  Producer  Wholesaler  Retailer  Consumer

Industrial Goods  Producer  Industrial Distributor  Industrial User

 Lecture 5:
Market Structure

Five Ps of Marketing (continuation)

4. Promotion. The following means that can be employed in
promoting the products are:

a. Personal Selling. Informing and persuading the buyer

to buy products on a personal basis by the seller
Steps in Personal Selling:
• Preparation
• Prospecting
• Pre-approach
• Actual Sales presentation
• Post Sale
 Lecture 5:
Market Structure

Five Ps of Marketing (continuation)

b. Advertising. Broadcasting or giving information to the
public about the products

c. Sales Promotion. This is an activity where the seller

encourages the participation of the buyer in order to
increase the sales of the products.

5. Public Relation. The marketer needs to establish a good

public relations with the customers