Question

SPORTS MARKET ECONOMICS

Give one example of a perfectly competitive team and one example of a monopoly team. Explain.

Answer 1

An example of a perfectly competitive market would be the grain market, there is hardly any real world example but grain markets is the closest alternative to this type of market. This is a type of market wherein there are a large number of buyers and sellers and no single player can influence the market price. There is no advertisement cost and the goods are homogenous which means that the goods are identical to each other.

An example of a monopoly is most common in the case of public utilities, for example an electricity company has resource advantage in terms of production of electricity, they can charge whatever price they want and supply any amounts of quantity they like. The features of utilities that make it a monopoly are that there are many buyers of the good but a only a seller, with the market being highly regulated.