Markets
Perfect competition
Perfect competition is a situation in which a number of business entities compete for the attention of consumers, but there is no single company that dominates that market to the point of setting the standards in terms of pricing. Markets with this type of condition normally have large numbers of sellers who are capable of meeting the needs of consumer market, and actively compete with one another for the business of those consumers.
There are several advantages to the existence of a perfect competition situation within a given consumer market. One has to do with the options open to customers. With a number of smaller companies offering similar products, the consumer is free to choose from any of them, in order to satisfy his or her needs. This situation empowers the consumer, who does not have to choose from one or two brands of the desired product, but can try multiple products. Since markets with perfect competition tend to be easier to break into, the influx of new providers means the consumer can enjoy additional options over the course of time.
Along with the benefits, there are also some potential drawbacks associated with perfect competition. A marketplace that contains an abundance of options for the consumer can be intimidating to customers, especially those who are not interested in trying different brands. When this is the case, the potential for earning and keeping the business of each consumer is diminished, a factor that can ultimately limit the entry of new companies into the marketplace.
Oligopoly
Oligopoly means few sellers. In an oligopolistic market, each seller supplies a large portion of all the products sold in the marketplace. In addition, because the cost of starting a business in an oligopolistic industry is usually high, the number of firms entering it is low.
Companies in oligopolistic industries include such large-scale enterprises as automobile companies and airlines. As large firms supplying a
Perfect competition is a situation in which a number of business entities compete for the attention of consumers, but there is no single company that dominates that market to the point of setting the standards in terms of pricing. Markets with this type of condition normally have large numbers of sellers who are capable of meeting the needs of consumer market, and actively compete with one another for the business of those consumers.
There are several advantages to the existence of a perfect competition situation within a given consumer market. One has to do with the options open to customers. With a number of smaller companies offering similar products, the consumer is free to choose from any of them, in order to satisfy his or her needs. This situation empowers the consumer, who does not have to choose from one or two brands of the desired product, but can try multiple products. Since markets with perfect competition tend to be easier to break into, the influx of new providers means the consumer can enjoy additional options over the course of time.
Along with the benefits, there are also some potential drawbacks associated with perfect competition. A marketplace that contains an abundance of options for the consumer can be intimidating to customers, especially those who are not interested in trying different brands. When this is the case, the potential for earning and keeping the business of each consumer is diminished, a factor that can ultimately limit the entry of new companies into the marketplace.
Oligopoly
Oligopoly means few sellers. In an oligopolistic market, each seller supplies a large portion of all the products sold in the marketplace. In addition, because the cost of starting a business in an oligopolistic industry is usually high, the number of firms entering it is low.
Companies in oligopolistic industries include such large-scale enterprises as automobile companies and airlines. As large firms supplying a