What is the difference between perfect competition and monopoly and monopolistic competition?
Market structure can be defined as the characteristics of a market, which can either be competitive or organizational. Moreover, market structure outlines the nature of the competition and the pricing procedure in a market. Therefore, it describes the number of entities producing similar goods and services in a market, and whose structure is determined by the current competition in the market. Show There are four types of economic market structures (organized form the least competitive to the most competitive):
A monopoly is a market that consists of a single firm that produces goods that have no close substitutes. Often, this market has many entry barriers. For instance, water providers, natural gas, telecommunications, and electricity are often granted exclusive rights to service. Characteristics of a Monopoly
OligopolyAn oligopoly market consists of a small number of relatively large firms that produce similar but slightly different products. Under oligopolies, there also exist some entry barriers with which other enterprises have to contend. Good examples include industries such as oil & gas, airline, and automakers. Characteristics of an Oligopoly
Monopolistic CompetitionThis is an imperfect competition in which several producers sell products that are different from one another. The difference lies in branding or, in most cases, quality. This means that the goods are not perfect substitutes for one another, but they are close substitutes. An example of this can be clothing, where marketing and branding are the main marks of distinction among different but apparently similar black shirts. Another example would be the fast-food industry, where a burger made by McDonald’s is quite similar to a burger made by Burger King from an economic standpoint. Consumers, nevertheless, usually have a preference between the two chains. Characteristics of Monopolistic Competition
Perfect CompetitionPerfect competition refers to a market that has many buyers and sellers, many similar products, and many substitutes. A good example is agriculture, where all rice farmers sell homogeneous products to consumers. Characteristics of Perfect Competition
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