1. 2. Monopolistic Competition 3. Oligopoly 4. Pure Monopoly
4 Types of Markets
1. Pure Competition
2. Monopolistic Competition
3. Oligopoly
4. Pure Monopoly

2. 1. Pure Competition--market
in which there are independent and
well-informed sellers dealing in
the same product.

3. 5 Conditions
Large number of buyers and sellers
All deal in identical products
Each buyer and seller must act independently.
(Forces in market should determine price)
Price Taker- you must sell your product for the
equilibrium price that day.
Buyers and sellers must be well-informed
of product and market
Free to enter into or get out of market
(Few barriers to entry)

4. -No preferred brands or restrictions
Examples: very few if any purely competitive markets
left. If a seller is a price-taker, then it is
considered to be pure competition.
-wheat
-corn
-tuna fishing
-cotton farming
-stocks

5. 2. Monopolistic Competition--
market where many buyers and sellers deal in a differentiated product.
Ex. Women’s clothing
Hamburgers

6. 5 Conditions
Large no. of buyers and sellers
Differentiated products
(Differences can be real or perceived by customers)
Limited influence on price
Price Searchers- can sell products at various prices
Uses advertising
5. Easy to get in and out of market

7. Oligopoly--market situation in which there are only a few big sellers.
Ex. Automobiles
Rubber
Steel
Cigarettes
Tires
**If only a few firms account for most
of the sales in the industry, then the market is
considered oligopolistic.

8. (Barriers to entry usually include
5 Conditions
Has only a few firms
Can influence price
Price Discriminator- -charge different prices
to different buyers when price differences
do not reflect costs of production.
Fair amount of product differentiation
Fair amount of advertising
Difficult to enter market
(Barriers to entry usually include
start up costs or gov’t rules)

9. Monopoly--market in which there is one seller of a
product.
*Monopoly is the exact opposite of pure competition.
Ex. Local phone co. came close but still has competition.

10. 5 Conditions
1. Only one firm
Total influence on price
Price maker-sets price without
having to consider competition.
3. No product differentiation
4. No advertising
Almost impossible to enter

11. **There are no real monopolies
left in the U.S.
1. Americans suspicious--laws
2. Easy to find substitutes
(margarine-butter)