Market Structures

Monopolistic Competition

Characteristics:

  • Many sellers offer similar, but not standardized, products
  • Non-price competition used instead of price to persuade people

Advantages:

  • Promotion of competition
  • More consumer choice and variety
  • Product and service quality development

Disadvantages:

  • Liable of excess capacity
  • Higher prices
  • Advertising more prevalent

Oligopoly

Characteristics:

  • Few sellers and many buyers
  • High barrier to entry

Advantages:

  • Easy for consumers to compare products because there are few competitors
  • This easy price comparison makes producers price more competitively
  • Stabilized prices

Disadvantages:

  • Small businesses have difficulty entering market
  • Due to lack of competition, innovation may be stunted
  • Companies cannot make independent decisions because they must consider the few competitors

Monopoly

Advantages:

  • Encourages innovation
  • Economies of scale can be gained

Disadvantages:

  • Exploitation of customers (higher prices)
  • High barrier to entry
  • Potential for supply to be limited - less choice
  • Potential for inefficiency

Characteristics:

         Natural - Most public utilities fall into the natural monopoly category.  Most natural monopolies are advantageous because you wouldn't want multiple companies setting up complex sewage systems or competition to pick up your trash

         Geographic - Exists when there are no other producers in a certain region. Sports teams are good examples of this because each sports team has a set city they are based in and no other teams are within that area (generally)

         Technological - When a firm owns a manufacturing process it is considered a technological monopoly. These tend to stunt development in the field and the owner of the monopoly makes a lot of money by letting them use their patent

         Government - Government services like the postal service are examples of government monopolies.  These monopolies tend to be necessary due to the fact that you wouldn't want multiple companies you could go to to send mail.

Comment Stream

2 years ago
0

great information, the images were good too

2 years ago
0

Its great, perfect, spectacular. I cannot picture a better project. You forgot example though. 👲 👲 😬 😬