Monopolistic Competition : Competitive Market Structure

Monopolies are defined as an industry dominated by one corporation, or business, like standard oil. They are a main driver of inequality, as profits concentrate more on wealth in the hands of the few.(Atlantic). A monopoly has total or nearly all control of that industry. They are considered an extreme result of the U.S. free market capitalism. The business own everything, from the goods to the supplies to the infrastructure. This company will become big enough to buy out other competitors or even crush their competitor by lowering their prices to get the other business to go out of business. They will then control the whole industry without any restarted, having the prices be what they want and the product to be in what condition they want

Perfect competition is an idealised market structure theory used in economics to show the market under a high degree of competition given certain conditions. This essay aims to outline the assumptions and distinctive features that form the perfectly competitive model and how this model can be used to explain short term and long term behaviour of a perfectly competitive firm aiming to maximise profits and the implications of enhancing these profits further.

Oligopolistic is a market structure which under the imperfect competition. According to Sloman & Garratt, oligopoly is only few large firms share a large portion of industry and control the market. When we hear that a term about “Big three”, “Big four” or “Big five” it can be set down as oligopolistic industry. In the oligopoly market competition, depends on the firms produce homogeneous or differentiated products and it will be categorize as homogeneous oligopoly or differentiated oligopoly. As Mcconell & Brue, 2008 stated because of the small number of firms, oligopolistic have worthy of consideration command over the prices and they have to think about their competitors conceivable reaction to their product`s price, product`s quality, advertising outlays and so on. The few large firms are interdependent but they have to always be awake of competitor`s action to maintain their firm can stand strong in the industries. Oligopolistic have a strong barriers of entry for the new competitors, which alike and dedicative by the pure monopoly. According to Jackson, Mclver & Wilson stated oligopolistic industries have a large economies of scale have to be consider for the new competitors because they must have a large amount of capital to invest heavy on the technology in the beginning, and this is the prevention of new competitors can easily enter to the industry. Furthermore, there are many industries are counted as oligopolistic for instance mining, steel, soft drinks, airlines,

There may also be imperfect competition due to a time lag in a market. An example is the “jobless recovery”. There are many growth opportunities available after a recession, but it takes time for employers to react, leading to high unemployment. High unemployment decreases wages, which makes hiring more attractive, but it takes time for new jobs to be created.A type of market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry

Existing Competitors. Rivalry among competitors within an industry use price discounting, new products, marketing, and other techniques to be competitive. Profitability of an industry suffers from high rivalry. The intensity with which companies compete and the basis on which they compete determine to which degree rivalry brings down an industry’s profitability (Porter, 2008). Pure competition is considered by economists as a competition with a high

the presence of competition. Is one of the clear features of the oligopolistic market. Since that within the oligopoly, there are a limited number of companies, any action by one the companies can directly affects the other competitors . so that each one the companies are always fuly aware about any move from other competitors. Also we should notice that the competition is not limited to the price, loyalty programs, advertisement, and variety of products are examples of non-price competition. ("Oligopoly", 2017)

A perfect competing market is a hypothetical market where competition is at its greatest possible level. Neoclassical economists argued that perfect competitive would produce the best possible outcomes for consumers, and society. The best market to have a business grow and develop in, would be a prefect competing market. There are many key characteristics of perfectly competitive markets to

In monopoly markets, business are free to enter and exit from the industry whenever they wish. However, it is not as easy to enter into the industry via a monopolistic market than it would be in perfect competition.

In this market type there are many suppliers, there product are differentiated. The market entry is easy and there is no competition in

The conditions for a monopolistic competition to exist are as follows. Initially, the products in the competition have to be differentiated. The differences can be in the quality of the products, the appearance, the label or the sales conditions.

Moreover another characteristic of the perfect competition market is Perfect information, which means every firm as a good knowledge of the market.

An oligopoly is a market form in which a market or industry is dominated by a small number of sellers. Oligopolies can result from various forms of collusion which reduce competition and lead

Due to the fact that all products are priced at market value, the consumer is more willing to purchase the item knowing that no one will offer a better price. In a perfect competition market the goal of the company is to maximize profits by ensuring production cost does not exceed revenues (calculating how much they can produce without losing money due to cost of production; MR=MC) and that consumer demands are met. Perfect competition markets are ideal because they tend to balance themselves out even though they have no barriers of entry (Hillman, 2014). Even if a company has a short run profit loss due to a period of high entry to market, at a certain point the revenues will equal market prices. Some companies will see it as a loss and will exit the market; hence allowing the prices to go back up and profits to be regained. The exiting of the market stops when every one of the firms remaining breaking even. If the businesses within the market are enjoying short-term profits this will increase entry to market; hence will decrease output from each company and decrease profits. This activity will end when the price of products equals total average cost and the economic profits are zero. The perfect competition’s long-term outcomes are two: allocative and productive efficiency (Hillman, 2014). Allocative efficiency is when a company’s output equals consumer demand, which eliminates the possibility of “deadweight”

New entrants to a market can threaten the market share of competitors already in the market. New entrants are interested in entering the Chinese market to try to gain a large market share from existing

One step away from perfect competition is monopolistic competition. This type of market structure has a number of different characteristics from the above. Which turn it into one of the most used market structures. In this scenario, companies are not all price takers and start making use of economies of scale in order to improve efficiency, reduce costs and increase profits. In the scenario companies sell a differentiated product at different prices. Like in perfect competition no barriers are put to entry and newcomers a constant threat to the market keeping every player always in search for a better mean to produce and compete.