Index
Introduction - 1
Defining A Market - 2
The Importance Of Competition - 3
The Result Of Competition - 4
Intervening In Markets - 5
The Allocative Role - 6
The Distributive Role - 7
The Regulative Role - 8
The Regulative Role (continued) - 9
The Role Of Government - 10
The Role of Government (continued) - 11
The Stabilizing Role - 12
Vertical and Horizontal Integration Defined - 13
Defining Market Structure - 14
How A Firm Can Grow - 15
Mergers and Takeovers - 16
Vertical And Horizonal Integration (Diagram) - 17
Why markets Vary in Structure - 18
Product Differentiation - 19
Product Differentiation (continued) - 20
Free Range ''Googs''- 21
Product Differentiation (continued) - 22
Non Price Competition - 23
Non Price Competition (continued) - 24
Defining The Types Of Market Structures - 25
Perfect Competition - 26
Perfect Competition (continued) - 27
The Market For Oranges - 28
The Market For Oranges (continued) - 29
Bitter Oranges - 30
Summary: Perfect Competition - 31
Monopolistic Competition - 32
True Blue Oranges - 33
Monopolistic Competition (continued) - 34
Oligopoly - 35
Oligopoly (continued) - 36
Oligopoly (continued) - 37
Kinked Demand Curves - 38
OPEC - 39
OPEC (continued) - 40
Monopoly - 41
Microsoft - 42
Why Monopolies Are Inefficient - 43
Revision Questions On Market Forms - 44

Product Differentiation - 22

Product differentiation relates to how close one good or service is seen as a substitute to another good or service. If consumers can not see a difference between one product and another, the item is said to be homogeneous.

If consumers do differentiate between the products of different suppliers, the product is said to be heterogeneous.

If there are many firms operating in a market, then each individual firm has little influence on the whole market. In these conditions, each firm is likely to be a price taker. Any firm that tries to increase its selling price will see consumers buying elsewhere. Each individual firm is likely to sell at the market price, because they have little influence on the market overall.

If some firms are large enough, or they have a product that is seen as different and ''better'' than their competitors, then these firms can influence the market price. These firms are said to be price makers.