Market Structures

Monopolistic Competition


  • Due to many sellers, people have a choice to pick from
  • Products/resources are about the same for producers before they make their changes to sell in the market
  • Products are all similar, but are different to the consumers giving  them more options
  • Sellers have less control on prices
  • Few barriers to enter or exit the market
  • Sellers may also use non-price competition methods that could benefit the consumer


  • Producers have their own areas where they have a monopoly over others, which can be dangerous when one company can grow and expand their monopoly to large areas

Most books that are the same size and have the same number of pages cost about the same. With many producers, books have ranging prices mostly due to the content and the publisher.



  • Products are similar for the consumers
  • It's not a full monopoly, so the few sellers can compete lowering prices and creating product differentiation


  • There is few sellers, which mean that price could be high if they form a trust to set the price point in market

Coca-Cola and Pepsi are the main producers of not only their main brand, but both own a network of many different soft drinks and water brands.



  • Cost of production could be cheapest if there is only that one producer
  • The system is less complex and can make it easier for a government to step in and enforce regulation on one business to affect a whole market then go after many business to have the effect


  • Consumers have no options since there is only one producer
  • Prices of the whole market is controlled by the one producer
  • There is many barriers that prevent other business to enter that market, some created by the company and by government

The start of anti-trust legislation in the United States started in the 1800s after a few companies dominated oil, steel, and railroad markets to increase profits from rising the market prices.

        Natural Monopoly

When cost of production is lowest when it is only one producer.
"A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. Because it is economically sensible to have certain natural monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal."
Example: Tap water since it's cheaper to have one tap water producer with a water network, then many networks and water providers.

        Geographic Monopoly

When they are the only seller in an area, forcing consumers to buy from them since it would be harder to travel farther out.
Example: A small town in the middle on nowhere may only have one store for miles. People in that town have no other options then to go to that store or travel miles to the next for other store.

        Technological Monopoly

Business owns, or patents, the process or technology needed to make a product to where they are the only ones who can legally make it.
Example: Apple and other giant tech companies patent every part of their products that they can to prevent others from releasing similar products.

        Government Monopoly

Government sets a company, that they might own, to be the only producer in a market. They could also set regulations to gain as much control they want over that company and prevent others from entering that market.
Example: Power supply companies


Comment Stream

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2 years ago

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