Market Structures: Perfect Competition, Monopoly, and Oligopoly

Posted on Oct 8, 2024 in Economy

Perfect Competition

Characteristics:

  • Low barriers to entry and exit
  • Many small businesses
  • Homogeneous product
  • Full information
  • Producers have no power to fix prices

Oligopoly

Characteristics:

  • High barriers to entry
  • A small number of enterprises
  • Product may be similar or differentiated
  • Intense rivalry or cooperation between companies
  • Power to influence prices

Monopolistic Competition

Characteristics:

  • Low barriers to entry and exit
  • Many producers
  • Differentiated product
  • Producers have some power to set prices

Cartel

A formal agreement made by several companies operating in an oligopolistic market to drive higher profits.

Monopoly

Characteristics:

  • A single enterprise
  • Strong barriers to entry
  • A single good or service
  • No competition
  • The company decides the price and quantity of product sold