Market Vs Monopolistic Competition

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A market is a group of good and service for buyers and seller in economic industry (Mankiw, 2011). The buyers were included by group of demand for the product, and the sellers were included by group of supply of the product (Mankiw, 2011). A market is only for group of economic agents, which is firms and individuals, for who were interact with each other in buyer-seller relationship (Wilkinson, 2005). In general, market structure can beclassified into four major characteristics: monopoly, perfect competition, monopolistic competition and oligopoly.

The first type of market structure in economic is monopoly. According to Mankiw (2011), monopoly isonly sellerfor a unique product of a good and servicewith no close substitutes in the market.
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Monopolistic competition describes a market structure in which relatively many firms supplies a similar but differentiated product, with each firm having a limited degree of controls over price (Mastrianna, 2013). Monopolistic competition also definition with a large number of seller produces different products (Nordhaus and Samuelson, 2010). Monopolistic competition has many sellers to rival for the same group of customer.The major characteristic of monopolistic competition is product differentiation. Product differentiation means the product have either or imagined characteristics that identify the product as unique with their own brand of the product. For example, personal computers have different character such as speed, memory, hard disk, modem size and weight. Personal computers are differentiated sold; they can sell at slightly different prices in market (Nordhaus and Samuelson, 2010). A monopolistic competition is a free entry market. Firms can enter or exit the market without restriction until the economics profit were driven to zero on the market (Mankiw,…show more content…
The foremost characteristic of oligopoly is interdependence of the various firms in the decision making, advertising under oligopoly a major policy change on the part of a firm is likely to have immediate effects on other firms in the industry, group behavior in oligopoly, the most relevant aspect is the behavior of the group, there can be two firms in the group, or three or five or even fifteen, but not a few hundred, competition this leads to another feature of the oligopolistic market, the presence of competition, barriers to entry of firms as there is keen competition in an oligopolistic industry, there are no barriers to entry into or exit from it, lack of uniformity another feature of oligopoly market is the lack of uniformity in the size of firms, and existence of price rigidity in oligopoly situation, each firm has to stick to its price, if any firm tries to reduce its price, the rival firms will retaliate by a higher reduction in their prices (Kumar,
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