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Overview of Market Structures Explained

The document outlines four different market structures: Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly. Each structure is defined by the number of firms, control over price, types of goods, and barriers to entry. Examples are provided for each structure, illustrating their characteristics and market dynamics.

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89 views2 pages

Overview of Market Structures Explained

The document outlines four different market structures: Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly. Each structure is defined by the number of firms, control over price, types of goods, and barriers to entry. Examples are provided for each structure, illustrating their characteristics and market dynamics.

Uploaded by

nonoko3512
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Market Structure Notes

Bell Work

Learning Target:
●​ List 4 different market structures
●​ Explain each of the different market structures

Type of Market Structure Perfect Competition Monopolistic Oligopoly Monopoly


Competition (ooo-lee-goo-pol-y)

Define a market where the sellers market structure where markets dominated by a a situation where there is a
of a product or service are many companies are small number of suppliers single seller in the market.
free to compete fairly, and present in an industry, and
sellers and buyers have they produce similar but
complete information: differentiated products

Control Over Price Firms are “price Takers” - set Some control Mostly “price makers” 100% choose prices
negotiations (no power) Lot off non-comp prices (ads) “Price makers”

Number of Firms Many small farms Large number Few large producers (<10) One (like command market)
No need for ads 1

Types of Goods Produce, milk, eggs. Differentiated products Very identical or differentiated Electricity, Diamonds
Perfect substitutes products Unique Products
Barriers to Entry Low - easy to enter or exit market Low - Easy to enter High barrier to enter (effort and money) High and hard to get into and out
Example of
●​ Perfect Competition
○​ markets where there are many buyers and sellers; all sellers are offering nearly identical products; entry is easy; and individual buyers and sellers have no control over price
○​ corn, Strawberry, Milk, … (identical products)

●​ Monopolistic Competition
○​ markets where there are still many buyers and sellers, but the products are “differentiated” through quality, features, name-brand or advertising; entry is still easy; and sellers have
limited control over price
○​ Fast food, shoes, furniture

●​ Oligopoly
○​ markets where there are few sellers selling similar products, giving them significant power over price and quantity in the market; it’s difficult for new sellers to enter due to high startup
costs, brand loyalty or other factors
○​ Cell phones, service providers, Cars
○​ Mutual independence = worry of other company decisions

●​ Monopoly
○​ markets where there is literally one seller of a unique good, who has tremendous control over price and quantity in the market; entry is impossible due to patents, government
protection or other factors
○​ Electric companies, De beers (canada diamond mines),

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