Syllabus: AQA AS Economics
Module: The Operation of Markets and Market Failure
Lesson: 3.1.4 Competitive and Concentrated Markets
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Introduction
Section 3.1.4 of the AQA AS Economics syllabus explores how different types of market structures affect economic outcomes. Students are introduced to competitive markets and concentrated markets like monopolies and oligopolies. Understanding these concepts is vital not only for exam success but for developing a practical sense of how real economies operate. This section provides the foundation for evaluating how competition, or the lack of it, impacts consumers, producers, and overall market efficiency.
Key Concepts
Market Structures: Students must distinguish between perfect competition, monopolistic competition, oligopoly, and monopoly.
Characteristics of Competitive Markets: Many buyers and sellers, homogenous products, free market entry and exit, perfect information.
Characteristics of Concentrated Markets: Few dominant firms, potential for collusion, price-setting power, barriers to entry.
Market Outcomes: How competition affects prices, output levels, efficiency, and consumer choice.
Evaluation: Students should critically assess the advantages and disadvantages of both types of markets for different stakeholders.
Real-World Relevance
Take the UK supermarket industry as a live case study. While the “big four” (Tesco, Sainsbury’s, Asda, and Morrisons) dominate, new entrants like Aldi and Lidl have increased competition. This has driven price wars, innovation in services like online delivery, and shifts in market share. Another strong example is the UK telecommunications market, where a few major providers dominate, raising questions around pricing strategies and service quality. These examples bring theory to life and give students accessible models to apply in their assessments.
How It’s Assessed
This topic typically features in:
Short Answer Questions: Definitions, characteristics, or basic diagram work (e.g., supply and demand shifts due to increased competition).
Data Response Questions: Interpreting market concentration indices, evaluating case studies about real-world markets.
Extended Responses: Essays that require evaluation of market structures’ impact on stakeholders and economic efficiency. Common command words include explain, analyse, evaluate, and discuss【26:OCR Syllabuses】. Students should be prepared to use diagrams to support their answers and to justify their reasoning with real-world examples.
Enterprise Skills Integration
This topic naturally strengthens:
Problem-Solving: Analysing how market changes affect businesses and consumers.
Decision-Making: Weighing up the pros and cons of different market structures.
Critical Thinking: Evaluating government intervention in concentrated markets. Tools like Enterprise Skills’ MarketScope AI can help students simulate changes in competition levels and predict market outcomes, providing a plug-and-play extension for applied learning【27:Enterprise Skills – Brand Kit】.
Careers Links
Understanding market structures links clearly to roles such as:
Business Analyst
Competition Economist
Market Researcher
Policy Advisor (CMA, Ofcom, etc.) This supports Gatsby Benchmark 4 (linking curriculum learning to careers) and Benchmark 5 (encounters with employers and employees)【31:ES – empathy_map_careers_leads】. A classroom discussion could include guest speakers from industries like retail or telecoms, offering students insight into how competition strategies are managed professionally.
Teaching Notes
Key tips:
Use contemporary examples to anchor abstract concepts.
Emphasise evaluation, not just description – a common exam pitfall.
Scaffold diagrams carefully – showing both competitive and monopolistic markets side-by-side can be powerful.
Encourage students to debate the pros and cons of monopolies rather than simply labelling them as “bad.”
For extension, use Pitch Deck Analyser to simulate market entry decisions based on different structures【27:Enterprise Skills – Brand Kit】.
Common pitfalls to watch for:
Students confusing “monopoly” with “monopolistic competition.”
Oversimplifying market concentration without acknowledging potential benefits, such as economies of scale.
