Types Of Oligopoly

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

This characteristic gives each of the relatively large firms’ substantial market control. While each firm does not have as much market control as monopoly, it definitely has more than a monopolistically competitive firm. The three important characteristics of oligopoly are: (1) an industry dominated by a small number of large firms, (2) firms sells either differentiated or identical products, and (3) the industry has significant barriers to entry.

Pepsi and Coke are good examples of the Differentiate Product Oligopoly: This type of oligopoly tends to focus on goods sold for personal consumption. The key is that people have different wants and needs and thus enjoy variety. We have distribution plants for both Coke and Pepsi here in our city to provide us with the representation of the oligopoly market structure.