Market Structures on the Spectrum of Competition
Perfect competition
Is a market structure in which small firms take part. All producers sell the same product. There are no barriers to enter the market. All customer and producers have the same information. Firms sell all they produce, but they cannot set a price. They are said to be ‘price takers’
Monopolistic competition
Is a market structure in which firms sell similar products nut not identical. There are no barriers to enter the market. Customers and producers have part of the information. There are many sellers so there’s a lot of competition.
Oligopoly
An oligopoly is a market structurein which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market.
Duopoly
Its similar to the oligopoly but only two producers/sellers control the market.
Monopoly
A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource
Price Leader
When a firm that is the leader in its sector determines the price of goods or services. Price leadership can be positive when the leader sets prices higher, since its competitors would be justified in ratcheting their prices higher as well, without the threat of losing market share. In fact, higher prices may improve profitability for all firms.
Concentration ratio
In economics, a ratio that indicates the relative size of firms in relation to their industry as a whole. Low concentration ratio in an
Is a market structure in which small firms take part. All producers sell the same product. There are no barriers to enter the market. All customer and producers have the same information. Firms sell all they produce, but they cannot set a price. They are said to be ‘price takers’
Monopolistic competition
Is a market structure in which firms sell similar products nut not identical. There are no barriers to enter the market. Customers and producers have part of the information. There are many sellers so there’s a lot of competition.
Oligopoly
An oligopoly is a market structurein which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. Although only a few firms dominate, it is possible that many small firms may also operate in the market.
Duopoly
Its similar to the oligopoly but only two producers/sellers control the market.
Monopoly
A monopoly is a market structure in which there is only one producer/seller for a product. In other words, the single business is the industry. Entry into such a market is restricted due to high costs or other impediments, which may be economic, social or political. For instance, a government can create a monopoly over an industry that it wants to control, such as electricity. Another reason for the barriers against entry into a monopolistic industry is that oftentimes, one entity has the exclusive rights to a natural resource
Price Leader
When a firm that is the leader in its sector determines the price of goods or services. Price leadership can be positive when the leader sets prices higher, since its competitors would be justified in ratcheting their prices higher as well, without the threat of losing market share. In fact, higher prices may improve profitability for all firms.
Concentration ratio
In economics, a ratio that indicates the relative size of firms in relation to their industry as a whole. Low concentration ratio in an