The Market Structures, Monopolistic Competition, Oligopoly And Monopoly

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Introduction A market is a dynamic and restless institution where commercial dealing between buyers and sellers takes place. There are many companies and businesses that run the market. According to how the firm functions and other factors like the number of competitor firms and the type of products produced, the firm is classified into a particular market structure. The other competing firms in the market structure affect the pricing strategies of a particular firm in the same industry. Based on all the facts mentioned above, there are four general market structures – Pure Competition, Monopolistic Competition, Oligopoly and Monopoly. This paper explores these market structures and how they affect the prices, supply and demand and the…show more content…
This means that the demand is highly elastic and thus the firm has no control over the prices. Farming is an example of a purely competitive market structure. The entry to this industry is fairly simple and there are several other farmers. This makes the demand highly elastic. On the other hand, a monopolistic competitive market firm is the one in which there are many firms producing the similar products but the products are not substitutes. For example, Nike and Adidas are companies producing shoes but there is a difference in the shoes that they produce. This implies that there is some control over the price since elasticity tends to be lower, but it is not considerable since buyers still have other options. Going a step further in terms of control over price, we have Oligopoly. This market structure consists of few companies and rather limited price control. While purely competitive firms are price takers, oligopoly firms can be considered as price setters, which can be explained through collusion. For example, different phone service providers form an oligopoly market structure and set their own price but this can change depending on how a competitor firm’s strategies affect their profit. Finally, the pure monopoly market structure is the one in which there is a single company providing the product and this leads to a high control over the prices. Since it is the only
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