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PERFECT
COMPETITION

 The most important feature of the perfect
competition market is that buyers and sellers in the market do not have the
power to influence price alone. Firms cannot set prices independently under
perfect competition conditions. The price for each company has already been set
and the companies have to accept it. There are some features that make up the
perfect competition market:

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 There are a large number of sellers and buyers
in the market who want to produce and buy the same goods. Because of the large
number of producers and sellers in the market, the production and sales
quantity of each of them is insignificant for the total sales quantity of the
goods in the market. As a result, when a firm increases or decreases its sales
volume, or even when it reduces to zero, there is no big change in the price of
the goods. In other words, each firm has to accept the market price as it is.
The same applies to buyers. Buyers are also very numerous. Accordingly, the
decision to buy more or less of any of these items will not affect the price of
the goods.

 In the perfect competition market, buyers and
sellers are completely free to enter and exit the market. Firms can go from one
place to another, from one industry to another, when appropriate.

 Both buyers and sellers need full information
about the market. Buyers and sellers know the market closely and thoroughly,
knowing exactly which goods are sold at what price and where.

 As a consequence of all this, both buyers and
sellers do not have the power to influence the market on their own in a
competitive market.

 In order for the perfect competition market to
take place, the goods have to be an example of the same quality in every sense.
Although there are large numbers of organizations that produce a particular
good or service in a market that is homogeneous, there is no objective or
subjective difference between each unit (bread, washing powder, etc.). For
example, different packaging, different labels prevent this condition from
happening. Buyers may want to pay a higher price for better-served,
better-packaged or different-labeled goods, assuming a quality difference.
Thus, more than one price arises. For example, as in the case of laundry
powder, if two brands that are completely identical in chemistry are different
in the consumer’s eyes, we cannot speak of homogeneity. That is why it is not
even possible to advertise in the full competition market.

 

MONOPOLY
MARKET

 

 Monopoly market is a market where only one
firm is found and only the firm knows where to produce and sell. In this
market, other commodities that will fill the place of goods cannot be found
easily.

 This firm is called a monopolist (that is, a
single seller or monopoly) because there is only one firm in the market.

 The best examples of monopoly are electricity,
water and natural gas companies.

 The monopoly market can also be formed by the
union of the companies with the same work force and the gathering together
under one roof in order to make more profit.

 We have said that the place where the
monopolist firm sells the goods can not easily fill up, but we can process this
situation in two ways partially and exactly. For example, although there is no
product that can be easily replaced instead of the electricity used for
lighting, there are various products such as wood, coal, fuel oil and natural
gas that can be replaced by electricity used for heating purposes. Electricity
used for enlightenment is full monopoly, and electricity used for heating is
partial monopoly.

 Another important feature of the monopoly
market is the constraints and difficulties that arise when entering the market.

 

TURKEY EXAMPLE OF A
MONOPOLY MARKET

 

 Turkey has several airline companies. One of
them is Turkish Airlines which is a monopoly firm in own sector. But these
companies usually fly to the western provinces and to the major countries of
the world. Turkey’s east and southeast airline services to THY carries 95%. In
such a case, THY sets prices as desired. One of the best examples of this is
the terrorist attack in Suruç in 2015. After the terrorist attack, THY
increased its ticket prices from 200 TL to 309 TL. After the terrorist attack,
THY hiked the ticket price by using monopoly power because of the intense
demand for Suruç.The
price of a seat in a market where only the Aircraft Company is located is $
200. The total number of seats that can be purchased in the market is 50 units.
Let’s say that the demand stays fixed with 200 passengers. Company B who saw
the high profit rate also entered the market and the total number of seats that
could be sold was 100 units. A competition began and the ticket price dropped
by $ 150, along with the increase in the number of seats and the processing of
exact competition conditions. This situation goes with the same way that
company C enters the market. It will continue with the entry of other companies
into the market until the profit rate is zero. But the monopoly market continued and if the
market could not enter other firms, the firm could offer the ticket prices at
the price it wanted.OLIGOPOLY
MARKET  The oligopoly market is a type of market where
there are few sellers, but many buyers. The oligopoly market is usually a
market consisting of three, five or eight giant firms. In addition to giant
firms, there are sometimes small firms. There are few large companies in
today’s market. There are three or five large firms dominating the market in
copper, aluminum, iron and steel, automobiles, tractors, trucks, automotive,
petrochemicals and heavy industries. The
characteristics of oligopoly markets are as follows:  The number of vendors in oligopoly markets is
so low as to give the firm the power to dictate or direct price, as in the
monopoly market; nor as much as each one will not affect the price. The
withdrawal of the company from the market on the oligopoly market is an
important factor that will affect the total supply in a significant way and may
cause prices to rise. The entry of a new company into the market will also reduce
prices and other firms can also impact.  The oligopoly market is not easy for new
companies to enter because of some reasons. Some of them are like production
capital, absolute cost advantages or big capital that exceeds the financial
possibilities of new firms who want to enter the market.  In the oligopoly market, the prices of all
companies are similar. Homogeneous oligopoly is called homogenous oligopoly, if
the firms’ goods are different from each other; this is called
“differentiated oligopoly.” Homogeneous oligopoly can be exemplified
by cement and steel, while differentiated oligopolies are examples such as
automobile, machine and building materials. As well as factors such as
advertising, sales policies, trade name, and so on, make a company’s product
different from other firms.  Oligopoly companies have to follow each
other’s behavior closely. If one of the companies tries to increase the
quantity of production, the quality of the goods, the quantity of sale, and the
price policy to be applied, the other companies will also affect these
companies because oligopoly market has a small number of firms and each company
is important. , each firm should closely monitor what other firms are doing and
take into account the response of other firms. There is usually no price competition in
oligopoly markets. Every firm wants to maintain the same price and maintain it.
But despite the lack of price competition, firms choose competition through
advertising in a common sense. As they can be seen in TV commercials, they
enter the competition by changing the shape, appearance, and packaging of the
same goods. It does not mention other competitors’ names and product features,
but claims that their products are superior to others. MONOPOLISTIC
COMPETITION MARKET  There are many companies competing in a
monopoly competition market similar to the full competition market. But these
firms produce differentiated goods as they can easily pass each other instead
of a homogeneous commodity as they are in the exact competitive market. The
production of differentiated goods is one of the most important features of the
monopoly competition market. At the same time, the firm, which is in
competition with each other, is giving a kind of monopoly power. However, since
a large number of companies are located in the market, the price policy of a
company cannot be influenced by other companies because the market share of
each company is small.  Differentiated goods differ in things like:
brand, packaging, point of sale, customer service, installment sales and
advertising. The important thing is that the merchandise is preferable and
easily indispensable to the seller’s merchandise in the buyer’s eyes. As an
example, although there are a large number of psychiatrists on the market today,
the fees of those who are popular among them are higher than the others. To
give another example, there are many shops selling shoes. Shoes at these stores
are different prices. Because the quality of the shoes in the buyer’s eye
varies from shop to shop. For example, shoes sold in an ordinary shoe store in
any country in the eyes of consumers are not the same as those shipped to elite
stores such as Zara, Beymen and Vakko. Sometimes the exact same two goods may
be different in the buyer’s eye because of the seller’s friendly and polite
service style of the seller. 

 Monopoly is a competitive market, as it is in
the full-fledged competition market, and it is easy and affordable for
companies to enter the market or out of the market. Due to the differentiated
commodities in the monopolistic competition market, each firm has partial
monopoly power, and for this reason a downward trending demand curve for each
firm’s product will be found. A supply curve for the market is out of the
question as each firm will set its own price to maximize profits.

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