Watch these curated videos to deepen your understanding of market structures and real-world economic concepts.
A comprehensive introduction to the four main market structures: perfect competition, monopolistic competition, oligopoly, and monopoly.
Learn about perfect competition, including short-run and long-run equilibrium, profit maximization, and market efficiency.
Explore how monopolies operate, their pricing strategies, barriers to entry, and the economic implications of market power.
Discover how firms in oligopolies compete, including game theory, collusion, and the kinked demand curve model.
These videos complement the real-world examples below. Watch them to strengthen your understanding before diving into the case studies!
Explore Real-World ExamplesEach article below relates to key concepts from Chapters 5 and 6, demonstrating how market structures affect real businesses and consumers.
The Competition Bureau of Canada has been increasingly scrutinizing the wireless telecommunications industry, dominated by Rogers, Bell, and Telus. Recent regulatory reviews focus on pricing practices, market concentration, and barriers that prevent smaller carriers from competing effectively. The Bureau has expressed concerns about price rigidity and parallel pricing behaviors that may harm Canadian consumers, who pay among the highest wireless rates in the developed world.
This article directly demonstrates oligopoly characteristics from Section 6.1: mutual interdependence (Big 3 watch each other's pricing), price rigidity (prices remain similar across carriers), high barriers to entry (spectrum costs, infrastructure), and the kinked demand curve model (firms don't undercut each other on price). It also connects to barriers to entry from Section 5.1, specifically economies of scale and control of essential resources (spectrum).
"If the Canadian wireless market were perfectly competitive instead of an oligopoly, how would consumer outcomes (prices, choices, service quality) differ? What barriers would need to be removed to move toward more competitive conditions?"
When patents on major brand-name drugs expire, generic manufacturers enter the market, dramatically reducing prices – often by 80-90% within months. Recent examples include blockbuster medications for diabetes, heart disease, and autoimmune conditions. Health economists note that while patent protection allows pharmaceutical companies to recoup R&D costs, it also creates temporary monopoly power that results in significantly higher prices for consumers during the patent period.
"Patents create a trade-off between innovation incentives (monopoly profits) and consumer access (higher prices). How should policymakers balance these competing interests? Would shorter patent periods be beneficial or harmful to society overall?"
Global wheat and corn prices have experienced significant volatility due to weather events, geopolitical tensions, and changing trade policies. Individual farmers, as price takers, must decide whether to continue operating when prices fall below their costs. News coverage shows farmers making decisions about planting more or less acreage based on expected prices, and some farms exiting the industry when prices remain low for extended periods – only to see prices recover as supply decreases.
Agricultural markets closely approximate perfect competition: many sellers of homogeneous products (wheat is wheat), no barriers to entry/exit, and farmers are price takers. This example demonstrates the shutdown decision (Section 5.2: operate if P > AVC) and long-run adjustment (Section 5.3: exit when P < ATC, supply decreases, price rises until equilibrium). The self-correcting nature of competitive markets is clearly visible.
"A wheat farmer notices that the current market price is above their average total cost but below last year's price. Using the concepts of short-run and long-run equilibrium, predict what will happen to: (a) this farmer's output decision, (b) the number of farms in the industry over the next few years, and (c) the market price."
A summary of the key economic concepts illustrated by these real-world examples.
Different industries operate under different competitive conditions, affecting prices and consumer welfare.
Review Section 5.1 →All firms maximize profit where MR = MC, but the outcomes differ based on market structure.
Review Section 5.2 →Free entry and exit drive competitive markets toward zero economic profit in the long run.
Review Section 5.3 →Oligopolists face kinked demand curves that explain price rigidity in concentrated industries.
Review Section 6.1 →Monopolists set P > MC, creating inefficiency that government regulation can address.
Review Section 6.2 →Policies like average-cost pricing can improve outcomes in markets with monopoly power.
Review Section 6.2 →Reading economics news now:
"Telecom prices rise again"
Before this class: "That's annoying"
After this class: "Classic oligopoly behavior! Kinked demand curve! Price rigidity! Mutual interdependence!"
Family: "Please stop." 😅
Explaining economics to friends:
"So you see, in perfect competition..."
*10 minutes later*
"...and that's why P equals MC equals ATC minimum!"
Friends: *already left* 🚶♂️🚶♀️
You're now officially an economics nerd. Welcome to the club! 🎉