Tecnicatura Superior en Administración de Empresas
Texto Nº 1
Economics Basics: Monopolies, Oligopolies and Perfect
Competition
Economists assume that there are a number of different buyers and sellers in the marketplace. This means that we
have competition in the market, which allows price to change in response to changes in supply and demand.
Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can
choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier
have equal ability to influence price.
In some industries, there are no substitutes and there is no competition. In a market that has only one or few suppliers
of a good or service, the producer(s) can control price, meaning that a consumer does not have choice, cannot
maximize his or her total utility and has have very little influence over the price of goods.
A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single
business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be
economic, social or political. For instance, a government can create a monopoly over an industry that it wants to
control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that sometimes,
one entity has the exclusive rights to a natural resource. For example, in Saudi Arabia the government has sole control
over the oil industry. A monopoly may also form when a company has a copyright or patent that prevents others from
entering the market. Pfizer, for instance, had a patent on Viagra.
In an oligopoly, there are only a few firms that make up an industry. This select group of firms has control over the
price and, like a monopoly, an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are
often nearly identical and, therefore, the companies, which are competing for market share, are interdependent as a
result of market forces. Assume, for example, that an economy needs only 100 widgets. Company X produces 50
widgets and its competitor, Company Y, produces the other 50. The prices of the two brands will be interdependent
and, therefore, similar. So, if Company X starts selling the widgets at a lower price, it will get a greater market share,
thereby forcing Company Y to lower its prices as well.
There are two extreme forms of market structure: monopoly and, its opposite, perfect competition. Perfect competition
is characterized by many buyers and sellers, many products that are similar in nature and, as a result, many
substitutes. Perfect competition means there are few, if any, barriers to entry for new companies, and prices are
determined by supply and demand. Thus, producers in a perfectly competitive market are subject to the prices
determined by the market and do not have any leverage. For example, in a perfectly competitive market, should a
single firm decide to increase its selling price of a good, the consumers can just turn to the nearest competitor for a
better price, causing any firm that increases its prices to lose market share and profits.
Vocabulary:
buyers: compradores Marketplace:
mercado
supply and demand: oferta y demanda
substitutes: sustitutos consumer: consumidor
supplier: proveedor. Sellers:
vendedores
good/s: productos, mercadería
Total utility: utilidad total
Market structure: estructura de mercado
Natural resurce: recurso natural
Monopoly: monopolio
Oligopoly: oligopolio
Firms: firmas
Producers: productores
Leverage: influencia
Market share: acciones en el mercado
Profits: ganancias
Responda utilizando la información que aparece en el texto:
1- ¿Cómo está formado el mercado?
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2- ¿De acuerdo a qué parámetros varían los precios en el mercado?
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3- ¿Cómo funcionan los sustitutos? ________________________________________________________________
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4- ¿Quiénes tienen influencia en los precios? _______________________________________________________
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5- ¿Cuál es la relación entre sustitutos y competencia?
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6- ¿Cuándo el productor puede controlar el precio?
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7- ¿Por qué puede hacerlo en un mercado con pocos proveedores?
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8- ¿Qué es un monopolio? _______________________________________________________________________
9- ¿Por qué el ingreso a este tipo de mercado es restringido?
10- Dé 2 ejemplos de monopolios y explique__________________________________________________________
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11- ¿Cuántas firmas hay en un oligopolio? ___________________________________________________________
12- ¿Qué efecto produce el hecho de que los productos de las firmas oligopólicas sean casi idénticos?
13- Dé un ejemplo de oligopolio. ___________________________________________________________________
14- ¿Cuáles son las dos formas extremas de la estructura de mercado? ____________________________________
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15- ¿Cómo se caracteriza la competencia perfecta? ____________________________________________________
16- ¿Cómo se determinan los precios?
17- En un mercado competitivo perfecto ¿A qué están sujetos los productores? _____________________________
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18- ¿Qué ocurre en un mercado competitivo perfecto si una única firma decide aumentar el precio de venta de un
producto?
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