Sue Gertrude G. Aguado
BSC –MA 3G TTh/11:00-12:30 pm
LECTURE 9
Competition between firms
Profit-seeking
3 types of ownership:
1. Proprietorship—is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business.
2. Partnership—is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses.
3. Corporation—is a legal entity that is created under the laws of a State designed to establish the entity as a separate legal entity having its own privileges and liabilities distinct from those of its members.
4 types of cempetition:
1.Perfect Competition—describes market with many buyers and sellers trading identical products so that each buyer and seller is a price taker.
2. Oligopoly—is a market form in which a market or industry is dominated by a small number of sellers (oligopolists)
3. Monopoly—exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.
4. Monopolistic Competition—is a form of imperfect competition where many competing producers sell products that are differentiated from one another
LECTURE 10
Antitrust and Competition Policy
Antitrust—law that promotes or maintains market competition by regulating anti-competitive conduct.
Tools of competition:
• Four Firm Concentration Ratio
• Herfindahl-Hirschman Index
Actually, it wasn’t that hard to understand the lecture. It was somehow a refresher to my knowledge for me not to forget those things. Most of the terms were very familiar. They were elaborated more for better understanding.
The three types of ownership are discussed—proprietorship, partnership and corporation. Their definitions were written above on my notes. Aside from that, 4 types of competition were enumerated—perfect competition, monopolistic competition, oligopoly and monopoly. Their definitions were written above. Perfect competition with its characteristics has already been discussed in our previous lessons. For the oligopoly, because of few numbers of sellers, the action of one firm can influence the actions of other firms. In this type of competition, barriers to entry are high. In monopoly, it lacks economic competition to produce goods or services and there are no viable substitutes because there is only one firm here. While in monopolistic competition, there are many numbers of firms, they have also market power same with the monopoly although here is just low. Firms here are price setter s which is the same with the monopoly.
Lecture 10, antitrust and competition policy were discussed. Antitrust law was created as a protection against monopoly in the market. Aside from that, two standard tools were also introduced here: Four Firm Concentration Ratio and Herfindahl-Hirschman Index. These were known as the two traditional structural measures of market concentration based on firms’ market shares.
Thus, the lecture was able to deepen my understanding regarding terms about economics which were introduced here.
