Perfect Competition, Monopolistic, Oligopoly, Monopoly Essay

Perfect Competition, Monopolistic, Oligopoly, Monopoly - Essay Example Perfect competition Many Sellers The perfect competition market have many sellers. The sellers are adequate in the market such and therefore a single decision by a particular firm in terms of prices, and output attract no impact on the equilibrium prices and quantities in the market. Many Buyers There are many buyers in the market with perfect information about the prices and quantities. Sellers cannot, therefore, manipulate the customers based on prices and quantities as the value of costs is determined by the economic forces of demand and supply. Firm are Prices Takers The firms in the perfect competition markets are price takers. The firm cannot, therefore, sell at different (at) price that the prevailing rates. Homogeneous Goods The sellers and buyers in the perfect competition marketing trade in homogeneous goods. The goods sold are similar and thus a seller has no option to sell at the prevailing prices in the market to make the normal prices. Perfect Information There is complete knowledge with respect to goods sold, prices and quantities. Sellers cannot manipulate the buyers who attach values to the commodities sold making firms operate under normal prices. No transportation costs There are no transportation costs in the market. The market structure assumes that sellers only sell around their local markets and hence walk into the markets freely with their goods. Free entry and Exit There are no barriers to entry and exit, and this is at the discretion of the sellers. Firms tend to enter the market when it is favorable and quite during the upheavals. Sellers may switch in between the various homogenous products depending on the one that sells and demanded. Monopolistic competition There are many firms with less market share. There are a vast number of differentiated products a feature that distinguish it from perfect competition market structure. Products differentiation is in the form of styles, location, pricing strategies, brand name, packaging, and advertisement. The firms enter or leave the market at their discretion. Monopoly There is restricted entry and exit from the market Monopolist restricts entry into the firm due to increased market power arising from economies of scale. A single firm may own a fundamental factor input hence locking out others hence enjoying a greater market share. Due the economies of scale the marginal cost of production declines and reduced total costs of production. A single Seller and Many Buyers In a monopoly market structure, there is a single seller producing a product with no close substitutes hence synonymous industry and firm. However, the firm benefit from a range of buyers that have no option hence buy at the Monopoly’s set prices despite restricted quantities. Unique Products (Heterogeneous) The firms in a monopoly market structure produce heterogeneous products. Therefore, there is less competition in the industry, and the firm can make supernormal profits in the short run since there are many buyers. Monopoly is the Price Maker The power possesses a higher degree of market power. The firm was thus able to charge prices at the equilibrium prices by manipulating the quantity of outputs supplied, but still find consumers buying in bulks as the firm is sole in the industry. Oligopoly Sell standardized or differentiated commodities. There are restrictions to entry due to economies of scale