Intro to Market Structures

Four Types of Market Structures Pure Competition Monopoly Oligopoly Monopolistic Competition

Pure Competition A market structure where there are so many sellers of the good or service that each accounts for only a small portion of the total market.

Characteristics of Pure Competition Large Market – numerous sellers and buyers Similar Products – almost identical good or service is sold. Easy Entry (and Exit) – needed investments are small, easy to learn to produce. Easy to Get Information – data about prices, quality, or supply is easy to obtain. *No Control Over Price – the market sets the price.

Example: Many Agricultural Products Thousands of farmers. Particular products are similar. Easy to begin or stop farming. Agricultural info is available to the public. No singer farmer can impact price – price set by market.

Other Market Structures

Monopolistic Competition Market structure where there are many sellers and buyers, but sellers refrain from selling identical products.

Characteristics of Monopolistic Competition Numerous Sellers Easy Entry Product Differences Non-Price Competition Some Control Over Price Examples: Soap, Toothpaste, Deodorant

Oligopoly A few large sellers dominate and have the ability to affect prices in the industry. Examples: Airline Industry, Automobile Manufacturers

Pure Monopoly A situation in which there is only one seller of a specific product that has no substitutes. Examples: NFL, MLB, NBA, Public Utilities

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