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Hi, Professor Navarro here again.
At this point in the course, we are done with
the basics of supply and demand, and consumer and producer theory.
And it's time to move on to how industries and markets are organized.
This is some of my favorite stuff in economics, and our goal
over the next three lectures is to understand how industries are structured.
And why different industries exhibit different
kinds of market conduct and performance.
Industry structure refers to how many firms are in an industry, whether
the firms are big or small, what the firms cost structure looks like.
And how market share is divided among the firms.
The four major types of industry structure include, perfect
competition as well as three forms of imperfect competition.
Monopoly, monopolistic competition, and oligopoly.
In this lecture, we will focus
solely on perfect competition.
It is the market structure by
which economists measure all other market structures.
And one of the goals of this lecture will be to
understanding the implications of each of
the major assumptions of perfect competition.
These assumptions range from numerous buyers and sellers, and
free entry and exit, to perfect information and homogeneous products.
By learning about these assumptions, we will come
to learn not only why the perfectly competitive market is
efficient, but also how markets in the real world can fail.
When one or more of the restrictive assumptions of perfect competition fail.
This concept of market failure is key to understanding
why government may sometimes intervene in the free market.
[SOUND]
The next three lectures are where the
rubber meets the roads. It's where we put together
everything we've learned about consumers, and producers, and supply and demand.
The goal is to understand how american industries are structured and
why different industries exhibit different kinds of market conduct and performance.
Industry Structure refers to how many firms are in an industry.
Whether the firms are big or small, what the firms cost
structure looks like, and how market share is divided amongst the firms.
The major types of industry structure include, perfect competition as well
as three forms of imperfect
competition; monopoly, monopolistic competition and oligopoly.
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These different kinds of market conduct in turn drive market performance.
Where performance is measured by yardsticks,
such as allocative and productive efficiency.
These yardsticks can tell us how well
or poorly a society's resources are being used.
This figure highlights some of the
key features of the structure, conduct, performance
paradigm.
Please study it carefully before moving on to our analysis of perfect competition.
Dr. Peter NavarroProfessor
