Market Structures
Hunter Freeman

Market Structure (overview)

Market Structures are what keep track of competing businesses in the industry

Monopolistic Competition

Characteristics

Many sellers and buyers

Similar but differentiated products

Limited control over prices

Freedom to enter/exit the market

Advantages

Products are differentiated

No barriers to entry

More efficient

Disadvantages

Some differentiation doesn't create utility

Examples

Examples

Oligopoly

Characteristics

Few sellers and many buyers

Standardized or differentiated products

More control of prices

Little freedom to enter or exit market

Advantages

Competitive strategy

Efficient in terms of innovation and new products

Companies are capable of deciding prices by choice

helps in lowering the average cost of production of goods

Disadvantages

Cartel-like behavior reduces competition

May be productively inefficient

Firms can be prevented from entering a market because of the high barriers to entry

Examples

Monoply

Characteristics

One seller

very high barriers to entry

no advertising

nature of competition based on advertising

pricing power significant

Advantages

can benefit from economics of scale and may be natural monopolies which are best served to remain that way

domestic monopolies can become dominant in their territory and then make it into overseas markets which result in earning valuable country export revenues

high profit levels for monopolies due to the high barrier to entry

Disadvantages

Restricts consumer choice

reduces consumer sovereignty

restricts output onto the market

companies can charge a higher price than in a more competitive market

Types of Monoplies

Natural monopoly-occurs when the costs of production are lowest with only one producer

Government Monopoly-exists when the government either owns and runs the business or authorizes only one producer

Technological monopoly-occurs when a firm controls a manufacturing method, invention, or type of technology

Geographic monopoly-exists when there are no other producers within a certain region

Examples

Examples

Sources/Hyperlinks

Comment Stream

2 years ago
0

I noticed you didn't have any sources or hyperlinks, just a space holder. But your images were entertaining and good examples. I wish you could have given more examples though. 🐋

2 years ago
0

Very informative, good examples.