An explanation of monopoly, oligopoly, perfect competition, and monopolistic competition - a detailed overview

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The Australian market is a diverse economic ocean - it has different species of marine life (industries), different swells (market structure) and even 'hot' and 'cold' spots (public companies). One of the key determinates to a successful national economy is the structure of its markets. The main market structures are: 1. Monopoly

2. Oligopoly

3. Perfect Competition

4. Monopolistic Competition

Each of these market structures have unique characteristics, and can be classified according to three factors. The degree of competition, the first factor, is important as it classifies markets into different market structures. It compares the relative sizes of firms, the amount of sellers (vendors) and the barriers of entry to the market. The
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They can only accept the prevailing market price. There are no barriers for entry to the industry. Any firm can enter the market and the present sellers can't stop that firm from entering. Advertising is practically pointless in perfect competition - because the products are virtually indistinguishable from each other, the purpose of advertising is defeated. Perfect competition is a theoretical market structure. This means that in theory, it is possible, but it is not usually common practice in an economy. Australia's fruit and vegetable market, however, would be the most similar.

Monopolistic Competition:

Monopolistic competition is a market in which a very limited number of very large firms operate, selling similar products. The main difference between the products of the companies is packaging and display. In monopolistic competition, advertising plays an extraordinarily important role - the companies need to distinguish between each others products, and come out saying that theirs is worth purchasing. Another great power in monopolistic competition is a concept known as 'brand loyalty'. The consumer selects the brand that they prefer or appeals to them the most, and they always buy that over the competition. The best example of monopolistic competition would have to be Coke and Pepsi. Both companies release a similar beverage, both have their minor subtleties, and advertising

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