Different Types Of Market Structures Essay

Different Types Of Market Structures Essay

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Introduction
Four different types of market structures would be perfect competition, monopolistic competition, oligopoly, and then the monopoly.
Perfect Competition
The perfect competition is a kind of market in which there are many companies or players that are making an identical kind of product. By definition that means a market structure in which the following five criteria are met: 1) All firms sell an identical product; 2) All firms are price takers - they cannot control the market price of their product; 3) All firms have a relatively small market share; 4) Buyers have complete information about the product being sold and the prices charged by each firm; and 5) The industry is characterized by freedom of entry and exit. Perfect competition is sometimes referred to as "pure competition". The market that most represents the perfect competition would be the agriculture. Here in Medford, Oregon the pear industry would be our example of the perfect competition. We have many growers, growing our wonderful and delicious pears, and then selling them to one of the two distributors who would then sell to all parts of the world. The next type of market structure on our list would the monopolistic competition.
Monopolistic Competition
Monopolistic competition describes an industry composed of a large number of sellers, of which each of these sellers offers a different but yet similar product, which is a good or service that has real or imagined characteristics that are different from those of other goods or services. “This differentiation can take many forms. The salespeople may be nicer, the packaging prettier, the credit terms better, or the service faster” (Amacher & Pate, 2013). These characteristics make competition with an area v...


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...heir market, from new providers with superior supplies or subsidized pricing. While opening this market will mean a reduction in price available to the oligopoly, this may be only short-lived. Once the new alternative has established some brand loyalty, and perhaps eliminated an inefficient competitor, they will raise prices and act as the oligopoly they replaced.
Monopoly vendors faced with international competitors are most likely to lose the monopoly, as opening markets to international trade will overcome the traditional barriers to entry problem, and reduce prices by expanding supply with a new lower price to notify customers of a new buying option. When a product made elsewhere is delivered for a lower price than is being delivered domestically, governments will support the notion, and drive prices down until product differentiation is factored into the buying.

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Different Types Of Market Structures Essay

- Introduction Four different types of market structures would be perfect competition, monopolistic competition, oligopoly, and then the monopoly. Perfect Competition The perfect competition is a kind of market in which there are many companies or players that are making an identical kind of product. By definition that means a market structure in which the following five criteria are met: 1) All firms sell an identical product; 2) All firms are price takers - they cannot control the market price of their product; 3) All firms have a relatively small market share; 4) Buyers have complete information about the product being sold and the prices charged by each firm; and 5) The industry is charact...   [tags: Perfect competition, Monopoly, Supply and demand]

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