This document defines and compares different market structures - perfect competition, monopolistic competition, oligopoly, and monopoly - based on the number of producers, similarity of products, ease of entry into the market, and level of producer price control. It analyzes examples like the milk, shoe, airplane and electricity markets. The key criteria for determining market structure are outlined and the conclusion emphasizes how the level of competition impacts consumers.
2. Market Structure Criteria
a) How many producers?
b) Are the products similar?
c) Is it easy to enter the market?
d) Do producers control prices?
3. Perfect Competition
Structure How many
producers?
Are the
products
similar?
Is it easy to
enter the
market?
Do
producers
control
prices?
Perfect
Competition
Many Yes Yes – so
producers
always face
competition
from new
firms
No- “price
takers” (they
must accept
the price the
market gives
them)
5. Monopolistic Competition
Structure How many
producers?
Are the
products
similar?
Is it easy to
enter the
market?
Do producers
control
prices?
Monopolistic
Competition
Many No –due to
product
differentiation
or branding
Yes –
producers
always face
competition
from new
firms
Some control
because
producers
control their
brand
7. Oligopoly
Structure How many
producers?
Are the
products
similar?
Is it easy to
enter the
market?
Do
producers
control
prices?
Oligopoly Small
number
Very
similar–
small
variations
No – often
due to high
start up
costs
Some
control
overprices
because only
a few
producers
9. Monopoly
Structure How many
producers?
Are the
products
similar?
Is it easy to
enter the
market?
Do
producers
control
prices?
Monopoly One Unique
product
No- barriers
limit other
firms from
entering the
market
YES – “price
setters” (they
get to
determine
price)
