Market Structures

Perfect Competition Many Buyers & Sellers Sellers Offer IDENTICAL Products Buyers are well informed about products Sellers can enter/exit market easily EXAMPLE - Agriculture

Monopolistic Competition Same as Perfect Competition BUT, Sellers offer DIFFERENT Products Examples: Jeans, Cola

Oligopoly Only a few large sellers Sellers offer Similar/Identical Products Sellers cannot enter the market Easily Top 3 or 4 Sellers Produce 70%+ of total market output Examples: Cars, Cereal *Cartel* - When Companies openly organize price setting (Collusion) Tacit Collusion - Collusion through no formal agreement

Monopoly There is a single seller No close substitute goods Other sellers cannot enter the market easily Examples: Time Warner Cable - LES

Types of Monopolies 1. Natural Monopoly – The sellers’ large scale allows it to use its human, capital and other resources most efficiently – Cable & Electric companies 2. Geographic Monopoly – When a monopoly forms due to its geographic location – General Store in a remote town

Types of Monopolies 3. Technological Monopoly – Inventions that can create a new product can give a company a tech. monopoly – General Dynamics is the only company with the technology to make Trident Submarines for the US NAVY – Patents (20 years) & Copyrights 4. Government Monopoly – Providers of goods and services that enhance the general welfare, they usually have public support – Roads, Bridges & Canals