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Market Structure, how each market structure could be affected by…
Market Structure
Monopolistic Competition
Examples
The restaurant business
General specialist retailing
Consumer services, such as hairdressing
Traits
Low barriers to entry and exit
Potential supernormal profits in the short term
Many buyers and sellers
Graph
Perfect Competition
Examples
Foreign Exchange Markets
Online Shopping
Agriculture
Traits
no company holds a substantial market share
the industry output is standardized
there is freedom of entry and exit
Graph
Oligopoly
Examples
Automobile industry
Technology Industry
Media industry
Traits
Each Firm Has Little Market Power In Its Own Right
High Barriers to Entry
Higher Prices than Perfect Competition
Graph
Monopoly
Examples
Microsoft
Google
Oil Industry
Traits
specialized information about production techniques unavailable to other potential producers
restrictions on entry into and exit out of the industry
a single firm selling all output in a market
Graph
how each market structure could be affected by externalities
Oligopoly
Positive externality
the reduction of the number of competitors (the market power effect)
Negative Externality
due to the optimal reallocation
Monopoly
Barriers to entry, Number of competitors, advertising, degree of product differentiation
Monopolistic Competition
Production capacity is not at full capacity, resulting in idle resources
Perfect competiton
resources will be misallocated and the market is inefficient
what each market has in common with monopolistic competition
Monopoly
firms decide the price level that customers would use to purchase goods and services in the market
Perfect Competition
elasticity of demand in the long-run
Oligopoly
relative size and the market control of each firm based on the number of competitors in the market
