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3B: Market Structure - Coggle Diagram

- - - - P > MC for monopoly due to monopoly producing at MR = MC, while PC firm produces at DDpc = SSpc
  - - - Are not producing a given output with the least cost combination of inputs
- - - - Changes in MC (eg variable costs) does not lead to change in price and output
    - - Fixing prices and limiting competition amongst themselves
      - Consumers pay a higher price, illegal
    - - Selling the same product to consumers in different markets at different prices not due to cost differences
      - Maximise revenue, but inequity for consumers who pay a higher price and have reduced consumer surplus
    - - Dominant firm lowering its prices below the AVC of its smaller competitors
      - Consumers enjoy lower prices, but lower dynamic efficiency after the competitors are forced to quit
    - - Lowering prices to gain market share, often temporary
      - Consumers enjoy lower prices
  - - - Advertising/Branding
        
        Can increase demand then enjoy int EOS at larger outputs
        
        Promotes competition, Higher average costs lead to higher prices
      - Product differentiation (Can be imaginary)
        
        Increase productivity, make product less substitutable, targeting a new group
        
        Part of lower average costs are passed on to consumers as lower prices, Higher dynamic efficiency for consumers
      - Goal
        -Increase demand
        -Make demand more price inelastic (more of in the long run)