Unit 1. Market structure and competition

TEXT A: Markets and Market Structure TEXT B: Rivalry TEXT C: Competition BUSINESS CORRESPONDENCE: Resume GRAMMAR: Passive voice

You should learn from your competitor, but never copy.

Copy and you die.

Jack Ma

(or Ma Yun (born October 15, 1964), a Chinese entrepreneur,

the Executive Chairman of Alibaba Group,

a family of highly successful Internet-based businesses,

the first mainland Chinese entrepreneur

to appear on the cover of Forbes.

Lead-in

Getting started:

1. Think of one item that you have either bought or sold recently. How did the transaction take place? Did you negotiate the price? Were you satisfied with the result?

2. Have you ever bought or sold anything on the internet? What is different about buying things in an online market?

3. What is a market? a marketplace?

4. What types of market structures do you know?

5. What can you say about monopoly?

PRE-TEXT EXERCISES

Reading drills

Ex.1. Read the words in the following groups. Pay attention to the word stress.

1. Words with the stress on the first syllable: crucial, element, market, structure, function, outcome, category, factor, power, product, entry, output, basic, model, buyer, seller, influence, type, typically, perfectly, customer, recipe, relevant, profit, fierce, feature, operate, detail.

2. Words with the stress on the second syllable: (to) determine, behaviour, (to) compete, competitor, approximately, (to) observe, restriction, advantage, monopoly, monopolist, significant, economist, economy, (to) produce, supply, demand, control, activity, distinction, effect, success, attempt, (to) collude, collusion, cartel, illegal, analysis.

3. Polysyllabic words with the main and secondary stress: competition, competitive, oligopoly, homogeneous, information, characteristics, situation, interaction, monopolistic, (to) maximize, circumstance, peculiar, precisely, inefficient, interrelationship, interdependent, marketplace.

Text A: Markets and Market Structure

Active Vocabulary

Key terms: market structure; perfect competition; monopolistic competition; monopoly; oligopoly; price taker; price maker; market power; economies of scale. Other words and expressions: actors in the market; entry conditions; information characteristics; product characteristics; homogeneous products; market price; to set a price; output; supply and demand; basic model; interaction of buyers and sellers; fierce competition; to maximize profit. Linking words and phrases: though; as well as; whenever; at the same time; unlike; so; clearly; yet; since; because of; including; basically; eventually, informative.

One of the crucial elements to understanding how a market will function (though it will not explain everything) is its market structure. These are the key elements that determine the behaviour of firms in the market and the outcome that will be produced by the market. One way of considering the market structure is to talk about the conditions that exist in the market. These conditions fall into (approximately) four categories:

• actors in the market (both numbers of actors and the sizes of these actors);

• the entry conditions (which includes the exit conditions);

• information characteristics of the market;

• product characteristics.

Taken together, these factors provide a useful picture of a market, revealing how it works and the results that one would observe in this market.

Four market structures are: