Monopolistic Market Structures
By Devin Jackson
Monopolistic Competition: This is when producers sell products that are similar but not identical.
Characteristics: It is a very common market structure, and works well when there are a lot of buyers and sellers.
Advantages: It provides consumers with plenty of substitutes. It allows each seller to have influence over small sections of the market. An example is that people who make cat shirts control the market for people who like cats. There is also not very much of a barrier to entry which lets
Disadvantages: Sometimes creates unnecessary waste, and the advertising can be seen as a waste for monopolistic areas.
Oligopolies: Only a few sellers offer a similar product. It is less competitive than monopolistic competition.
Characteristics: A few large companies have percentages of the total share of the market, and dominate it completely. An example of this is the movie industry, because most of the movies you see will be made by the same few companies.
Advantages:They can work towards long term profits, which can dictate price. The high profits generated can be used to make technological innovations and development of new products.
Disadvantages: Dominant companies may not think of improving their products, and new companies can have difficulty in entering the market.
Natural Monopoly:the costs of production are lowest when only one firm provides output. This can happen when it is in the most basic or natural economic state. An example is Waste Management.
Government Monopoly: this is when the government either owns the business or authorizes only one producer. An example is the US postal service.
Technological Monopoly: This is when the company controls the manufacturing method or technology that allows for an increased rate of production at a lower cost. Examples are Apple and Google.
Geographic Monopoly: This is when there are no other producers or sellers within a certain region. An example is Cable companies.
Advantages of a Monopoly: The increased output can lead to a decrease in average cost per product, and can lead to research and development opportunities.
Disadvantages of a Monopoly: There is less consumer sovereignty, as well as a lower level of service, and the lack of competition can lead to a lower quality of goods.