The Positive Economist Susan Hayes

PDST Economics Conference

Economic Conference

Markets2nd Oct 2010

Markets

• Perfect Competition

• Monopoly

• Monopolistic Competition

• Oligopoly

Perfect Competition

Who dictates price?

• The Consumer

• The Industry

• The Retailer

... hence participants are a price taker

Does perfect competition exist?

• In practice it is impossible to find absolutely

“perfect competition”

• Illustrative Examples:

– Vegetables in supermarket

– Convenience Stores (Gala, Mace, Centra)

– Google, Bing, Yahoo!

Monopoly

How do Monopolies arise?

Legislation Iarnrod Eireann

Mergers & Takeovers Ryanair & Aer Lingus takeover

Sole ownership of an essential factor or production An Post

Economies of Scale Microsoft

Cartels OPEC, SIPTU

Product Differentiation & Advertising Google

A threat to Google’s Monopoly?

Does a monopoly provide an incentive or

disincentive to innovate?

• No competition?

• Protecting the status of a monopoly

• Lure of access to a monopoly

“The Tracker Mortgage” – Bank of Scotland, Ireland

Monopolistic Competition – The most common form

of competition?

How can ‘one separate themselves from the

crowd’ ?• Advertising

– Ryanair

– 8202020 Cabs

– Bank of Ireland Ads (with subtitles)

 

• Service

– Minstrel on the side of my coffee

– Tea when you arrive at a B&B

– Google Instant

 

• Product

– Burger.... “Happy Meal”

– Green Energy Lightbulbs

– (Extra) Low Fat Cream Cheese

Oligopoly…..

• “dominated by a few very large firms”

• .... “depends on your market”

Examples

• Local Pubs, Butchers, Shopkeepers

• ESB, Airtricity, Bord Gais

• Vodafone,O2, Meteor

Barriers to Entry

Economies of Scale BP, Shell, Dragon Oil

Channels of Distribution

Landing Slots in airports

Limit Pricing Meteor, O2, Vodafone

Brand ProliferationRTE, Newstalk, Today

FM