Market Structures
Perfect Competition
A perfect competition industry infrastructure is one that comprises numerous small sellers and buyers. Firms that comprise the industry produce similar products and consumers have complete and accurate information about their prices. All firms have equal access to raw materials, capital, labor and technology. A perfectly competitive industry, therefore, has no single market leader or monopolistic firm. All participating companies are identically leveraged and each must offer high quality products to retain customers. Examples of perfectly competitive industries include those that offer agricultural products, such as livestock, corn and wheat.
Pure Monopoly
A pure monopoly industry infrastructure comprises a single producer or supplier of a product or a service that has no close substitutes. The single industry player controls all resources and technology and blocks potential competitors from entering the industry. Monopolies are public or private. Public monopolies serve the general public and their primary goal is not profit maximization. Examples of public monopolies include local telephone companies and water companies. Private monopolies are large, private companies, typically multinationals, which have profit maximization as their primary goal.
Monopolistic Competition
A monopolistic competition pertains to an industry infrastructure that has characteristics of competition and monopoly. The industry comprises many firms, which offer substitute products, and many buyers. Although the products are substitutes, they are differentiated on the basis of physical attributes, image, advertisements and accompanying services. For example, Dominos and Pizza Hut offer pizza but they are differentiated on the basis of ingredients, recipes and taste. Companies within the industry can gain monopoly over their competitors by offering superior products or better service.
A monopoly lacks any competition either within the market or within a specific
A perfect competition industry infrastructure is one that comprises numerous small sellers and buyers. Firms that comprise the industry produce similar products and consumers have complete and accurate information about their prices. All firms have equal access to raw materials, capital, labor and technology. A perfectly competitive industry, therefore, has no single market leader or monopolistic firm. All participating companies are identically leveraged and each must offer high quality products to retain customers. Examples of perfectly competitive industries include those that offer agricultural products, such as livestock, corn and wheat.
Pure Monopoly
A pure monopoly industry infrastructure comprises a single producer or supplier of a product or a service that has no close substitutes. The single industry player controls all resources and technology and blocks potential competitors from entering the industry. Monopolies are public or private. Public monopolies serve the general public and their primary goal is not profit maximization. Examples of public monopolies include local telephone companies and water companies. Private monopolies are large, private companies, typically multinationals, which have profit maximization as their primary goal.
Monopolistic Competition
A monopolistic competition pertains to an industry infrastructure that has characteristics of competition and monopoly. The industry comprises many firms, which offer substitute products, and many buyers. Although the products are substitutes, they are differentiated on the basis of physical attributes, image, advertisements and accompanying services. For example, Dominos and Pizza Hut offer pizza but they are differentiated on the basis of ingredients, recipes and taste. Companies within the industry can gain monopoly over their competitors by offering superior products or better service.
A monopoly lacks any competition either within the market or within a specific