Oligopoly
There are various types of market structures but the most important of all is the oligopolistic market structure. An oligopoly is when a market is dominated by relatively few large firms. An example of an oligopolistic market structure is commercial banking and the newspaper industry.
One of the other market structures is Perfect Competition (PC). The way that firms in perfect competition set the price of their products is through the MC=MR condition for profit maximization and at the same time marginal cost must be rising as well. In the short-run firms in a perfectly competitive market structure can achieve both profits as well as suffer from losses but in the long-run because of low barriers of exit they always Break-Even ( AR=AC ). (Anderton. A. pg. 325-326). The demand curve in PC is Perfectly Elastic which means that firms are price takers and they have no control in setting the price. ( Firms Demand Curve=Market Price=Marginal Revenue). (Lecture notes, Market Structure). Firms in the agriculture sectors can be an example that could be used under this market structure.
Near the spectrum of PC is Monopolistic Competition and instead on having homogeneous products as in (PC) they have slightly differentiate products. Another difference is that of a downward sloping demand curve. The firms in this market structure will produce where MC=MR and price where AR=AC. In the long-run because of no barriers to entry they will also Break-Even. ( Earn only normal profits). (Anderton, A. pg. 344). An example of Monopolistic Competition are fast foods outlets. (Lecture notes, Market Structures)
Another market structure that needs to be compared with Oligopoly is Monopoly. Is found on the far end of (PC). The definition of a Monopoly is that of a single producer which makes products that have no close substitutes. (Lecture notes, Market Structures)
A Monopolist uses Price Discrimination and separates markets and consumers in various ways so as to profit maximize.
One of the other market structures is Perfect Competition (PC). The way that firms in perfect competition set the price of their products is through the MC=MR condition for profit maximization and at the same time marginal cost must be rising as well. In the short-run firms in a perfectly competitive market structure can achieve both profits as well as suffer from losses but in the long-run because of low barriers of exit they always Break-Even ( AR=AC ). (Anderton. A. pg. 325-326). The demand curve in PC is Perfectly Elastic which means that firms are price takers and they have no control in setting the price. ( Firms Demand Curve=Market Price=Marginal Revenue). (Lecture notes, Market Structure). Firms in the agriculture sectors can be an example that could be used under this market structure.
Near the spectrum of PC is Monopolistic Competition and instead on having homogeneous products as in (PC) they have slightly differentiate products. Another difference is that of a downward sloping demand curve. The firms in this market structure will produce where MC=MR and price where AR=AC. In the long-run because of no barriers to entry they will also Break-Even. ( Earn only normal profits). (Anderton, A. pg. 344). An example of Monopolistic Competition are fast foods outlets. (Lecture notes, Market Structures)
Another market structure that needs to be compared with Oligopoly is Monopoly. Is found on the far end of (PC). The definition of a Monopoly is that of a single producer which makes products that have no close substitutes. (Lecture notes, Market Structures)
A Monopolist uses Price Discrimination and separates markets and consumers in various ways so as to profit maximize.