Market structures are economic models that help assess the competition occurring between businesses in a market. They represent multiple companies working together in one way or another to influence prices and availability of products.
Monopolies are situations in which one entity is the sole seller of a product and therefore has total control of product pricing and availability. There is usually a huge barrier to entry, meaning that it is hard for competition to ever arise because it is difficult to start a business capable of pricing things similarly or providing a similar quality of product. This can have the serious disadvantage of leading to very high consumer prices for products, as the company has complete control over that product. There are many different types of monopolies, which are the following:
~Natural Monopoly - A monopoly that occurs naturally and the public usually has no issue with. Specifically, the costs of production are lowest when one company provides output, and thus that company can offer products cheaper than any competition that even tried to enter the market. Thus, the obvious advantage would be that consumers get the same products for cheaper. Walmart is a perfect example of a natural monopoly.
~Technological Monopoly - When one company has control over a specific manufacturing process and therefore can create a given product significantly easier than other companies. If a drug company patents a way of making a drug, for example, then it has a technological monopoly.
~Geographic Monopoly - When there are no other sellers in a given region to compete with a company. If there is only one supermarket withing a 30 mile radius, it will have a monopoly over the people in that region that still need food and other basic goods. Any store in a remote location makes a good example, as consumers do not exactly have a choice as to where they will go. Recently, internet service providers have been seen as negative geographic monopolies because they stay out of each others' "turf" to allow themselves to overcharge for or change service without losing customers.
~Government Monopoly - When the government chooses to have one company produce all of one product because it makes sense, cost wise, to do it that way. This may occur via the government only contracting one company. A great example would be that of the Department of Defense and Lockheed Martin. Lockheed creates various simulators for the Department of Defense as well as the military vehicles that they are simulating. It wouldn't really make sense to have people competing in this field.
An oligopoly occurs when there are only a few major companies with large market share competing in a given market. An advantage of this is that the companies involved make large profits due to their large market share. Additionally, prices are usually stable for the consumer because there is controlled and steady competition between the large firms. However, this could lead to unrealistic pricing if the companies set all their prices unfairly. While potentially stable, the prices could still be set too high. Some examples of oligopolies would include that of, say, Microsoft and desktop operating systems. The only true competition is Apple and their operating system. This creates an oligopoly between the two companies, because they are the only true players in the market at the time.
Another good example of an oligopoly would be that of major airliners. Outside of the big players (American Airlines, Delta Airlines, United Airlines, Southwest Airlines), there isn't really a way to get around via flight.
Monopolistic competition refers to competition between many companies in which products really are not similar or standardized enough at the consumer level for the competition to be significant. Essentially, the "substitutes" for one product really are not suitable substitutes. For example, if I want a history textbook for a history class, it would not be suitable for me to go out and buy a novel. Both are books, but one is certainly not a decent substitute for the other. Thus, the consumer is left with fewer options.
There are benefits to this, though. For one, there are no significant barriers to entry for businesses trying to get started in the market. Also, there are usually products that are priced very differently from each other, providing the consumer with more choices relating to his or her budget.
Some examples would include books, t-shirts, cell phones (A flip phone isn't a suitable substitute for a smart phone anymore), and more.