Syllabus: AQA - GCSE Economics
Module: How Markets Work
Lesson: 3.1.5 Competitive and Concentrated Markets

Introduction

This lesson focuses on Section 3.1.5: Competitive and Concentrated Markets from the AQA GCSE Economics specification. It supports students in understanding how different market structures impact pricing, consumer choice, and business behaviour. The topic is a core part of the microeconomic content under “How Markets Work” and provides a foundation for deeper analysis in both assessment and real-life application. It ties directly to key skills like evaluating competition and analysing market power—critical for both exam performance and future decision-making.

Key Concepts

According to AQA’s GCSE specification, students should be able to:

• Distinguish between competitive and concentrated (including monopolistic and oligopolistic) markets.

• Understand the characteristics of perfectly competitive markets, such as many buyers and sellers, identical products, and easy market entry/exit.

• Analyse how competition impacts price, efficiency, and consumer choice.

• Recognise features of monopolies (single seller, price-setting power) and oligopolies (few large firms, interdependence).

• Evaluate how market concentration can lead to higher prices, lower output, and less consumer choice, but potentially more innovation and economies of scale.

These concepts form a vital bridge between theoretical understanding and real-world market dynamics.

Real-World Relevance

Understanding market structures is crucial when analysing industries like:

• Supermarkets: While appearing competitive, dominance by a few large firms (Tesco, Sainsbury’s, Asda) reflects an oligopolistic structure.

• Tech Giants: Apple, Google, and Microsoft operate in highly concentrated markets where barriers to entry and brand loyalty are immense.

• Utilities: Local water or rail services often operate as monopolies, regulated to protect consumer interests.

Students can link these examples to headlines about price rises, regulation, or market investigations (e.g., CMA probes into tech or energy sectors).

How It’s Assessed

This topic appears in Paper 1: How Markets Work. Students may encounter:

• Multiple choice questions testing definitions and comparisons.

• Short answer questions explaining effects of competition or monopoly.

• Data response tasks using real-world contexts (e.g., supermarket market share).

• Extended responses evaluating market outcomes, e.g. “Assess the impact of monopolies on consumers and producers.”

Key command words include explain, analyse, evaluate, and compare. Students should be confident using diagrams and real examples in longer answers.

Enterprise Skills Integration

This topic offers excellent scope to embed enterprise and employability skills:

• Decision-making: weighing trade-offs in pricing, market entry, or innovation.

• Problem-solving: identifying when market outcomes are inefficient or unfair.

• Communication: presenting arguments for or against regulation of concentrated markets. Using Enterprise Skills’ MarketScope AI, students can simulate entering competitive vs. concentrated markets, making pricing and strategy choices to see outcomes in real time—plug-and-play and instantly relevant.

Careers Links

This content supports Gatsby Benchmarks 4, 5, and 6:

• Benchmark 4: Linking curriculum learning to careers by showing how market structures underpin industries like retail, telecoms, and finance.

• Benchmark 5 & 6: Invite guest speakers from consumer watchdogs, tech firms, or local business federations to discuss market fairness and competition.

Related roles include:

• Competition economist

• Market analyst

• Regulatory policy advisor

• Business strategist

These jobs rely on skills in critical thinking, interpreting market data, and understanding economic incentives.

Teaching Notes

Top Tips:

• Start with extremes: compare a street market (highly competitive) to a utility company (monopoly).

• Use diagrams early and often, especially to contrast price and output in different market structures.

• Set up debates: “Should governments break up big tech monopolies?”

• Use headlines from the Competition and Markets Authority (CMA) for real-world hooks.

Common Pitfalls:

• Students may assume monopolies are always “bad”—help them evaluate rather than judge.

• Overgeneralising “competition is good”—context matters (e.g., price wars vs. innovation).

Extension ideas:

• Task students with designing a business plan for entering a concentrated market—what barriers would they face?

• Use the Pitch Deck Analyser to critique strategies from firms in different market types.

Differentiation:

• Scaffold definitions and diagrams for lower-attaining learners.

• Challenge higher-level students with quantitative tasks on market share or Herfindahl index (where appropriate).