Market Structures

A market structure, generally speaking, is an economic model of any kind. This can include everything from the elusive perfect competition market to the absolutely monopolistic one. A list of different kinds of market structures and their respective characteristics can be found here.

Monopolistic Competition

In this system of semi-monopoly, the various producers of a product within an industry all (or usually) have some differentiating factor that makes their product somehow non-standard. This may be an item with a different design, some kind of differentiation in service, a difference in quality, or any number of other things.

Advantages:

This is the system in which the most competition occurs out of any of the market structures, and so it is the most in line with the ideal of a market economy and typically the best for the customer in terms of price and options. Additionally, it allows a larger number of players, giving a broader number and often type of people the ability to make their living through the industry at hand

Disadvantages:

In the world of monopolistic competition, businesses have to do something to get their product to stand out, even if the solution isn't really relevant in terms of utility. This means that there is often a lot of waste. Physically, this waste comes in the form of unnecessary display and packaging to entice the buyer into choosing said product, and there are also resources that are allocated to the same area that one would consider wasted


An example of a number of similar but somehow differentiated products.

Oligopoly

In an oligopoly, while one company does not control the entirety of a market, it is dominated by a small number of businesses. These businesses can be selling either standardized or non-standardized products, although it usually ends up being a slightly differentiated but very similar product. Oligopolies are usually created because entry into the industry has a high number of start-up costs.

Advantages:

While an oligopoly may only have a few participants, they tend to be highly competitive, which may drive down prices. Additionally, oligopolies tend to be quick and efficient in innovation.

Disadvantages:

By very definition, an oligopoly means that consumers have limited choice. Additionally, in order to protect themselves, the participants in an oligopoly often create artificial barriers to entry, stopping more competition from joining the fray

Because of the incredibly high cost of entry into the market, there are very few businesses in the cruise line industry.

Monopolies

In the case of a monopolized industry, for one reason or another, a single business completely controls one aspect of the market. While this can be caused by a number of factors, the end result is a business with zero competition.

Advantages:

The "advantage" of a monopoly is usually found in the monopoly itself, as they tend to be decidedly anti-consumer. However, sometimes they can be a good thing. A corporation monopolizing a market allows it to have unique methods of innovation, and their are assertions that the best innovation and progression comes out of monopolies because of their focused profits.

Disadvantages:

The obvious disadvantage of a monopoly is that there is no consumer choice. Furthermore, the lack of competition often leads to businesses gouging the consumer price-wise. Furthermore, in businesses like De Beers actively restrict output into the market and create an artificial shortage of a product (in this case diamonds).

Forms of Monopolies

Government:

In the case of government monopolies, a business is created by the government to service people. This is often done because it would be inefficient or in some way unattractive for private industry to handle, such as if the profit margin was too low.

Natural:

A natural monopoly comes about when having more than one business competing in an industry would only serve to make it unnecessarily inefficient. Most natural monopolies are found in the form of utilities corporations.

Technological:

Technological monopolies are monopolies because they have some form of patented technology that nobody else can use. Their monopolies tend to get more narrow as the vaguer patents they have expire.

Geographic:

In this form of monopoly, there is not enough people or resources in an area to support multiple corporations, so eventually all of them die out but one.

Sources

http://smallbusiness.chron.com/advantages-monopolistic-competition-20585.htmlhttp://www.economicsonline.co.uk/Business_economics/Monopolistic_competition.htmlhttp://www.economicsonline.co.uk/Business_economics/Oligopoly.htmlhttp://yourbusiness.azcentral.com/examples-oligopoly-markets-6720.htmlhttp://www.economicsonline.co.uk/Business_economics/Monopoly.html

Comment Stream

2 years ago
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You've got a very extensive overview, and everything is quite organized.

2 years ago
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Good use of links. I enjoy pressing buttons

2 years ago
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love your color choice and the font style you used.

2 years ago
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I feel like Comic Sans would have been a more appropriate font

2 years ago
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I really like your use of links and buttons. Although, your choice of font is slightly difficult to read. - Cole Johnston

2 years ago
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lots of content and good use of buttons. I think you could have used some more pictures though.

2 years ago
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2 years ago
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