###### tags: `fh` `BusinessAdmin` Doiber Sebastian # Exercise 1 - What is economics? Identify the four types of competition, explain the differences among them and what are consequences for the market. Provide two examples of each. (Use examples different from those discussed during the lecture.) [TOC] ## Vorwort Sehr geehrte Frau Professor! Mein Abgabe finden sie unter dem folgenden Link: https://hackmd.io/@ZuC41E9XT3uiey_M5TizbA/r1gI19Prw Zur Sicherheit lade ich Ihnen auch noch die Seite als PDF hoch, Sie werden allerdings feststellen, dass die Formatierung auf der Website wesentlich schöner ist. mit freundlichen Grüßen Doiber Sebastian ## Competition in economics * market needs/has a sufficient number of buyers & sellers * sufficient sellser -> prices stay low * sufficient buyers -> product is required * many sellers -> companies compete for buyers * better prices * better quality * better service ## 1.Perfect Competition * many sellers * many choices for consumers * prices regulated by supply&demand (generally low for consumers) * usually doesn't work * marketing can work so consumers will buy the more expensive product ### examples * Apple Farming * Same region has many farms so they need to compete * if one is too expensive customers will go to another * this leads to the other farms lowering their prices as well * Plant Market in general ## 2.Monopolistic Competition * many competitors * every company sells slightly different products * low bar of entry * each one uses marketing to stick out * slight change in price might loose you customers ### examples * restaurants * a greek and a mexican restaurant * both sell food but it is likely very different * retail shops * salons * consumer electronics ## 3.Oligopoly * more than 2 competitors * but not more than a handfull * high barrier to entry * all companies are at risk of entering a price war * which harms everyone * little competition -> higher profit margins * Government sets laws to prohibit price fixing * which are ineffective (OPEC) ### examples * railroads * only a few had the licenses and the money * ÖBB & Westbahn do that even today * Commercial Airline market ## 4.Monopoly * only one company covers the entire market. * can set prices however they like * which are usually high * this can happen because: * barrier of entry is too high * artificially created by the government * electricity * mail delivery * gas * a Product is patented * one megacorporation buys up all competitors * laws should prevent that but as we know with enough money jail is optional. ### examples * Electricity * there could be only one Provider in an Area * Drugs * like Viagra which was patented