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3.8 Market structure - Coggle Diagram

- - - - Consumers must either buy the product of the firm or go without it
    - - Can determine quantity supplied which can determine the price
    - - Smaller firms will find it difficult to compete
    - - They can set a high market price as there is no competition and they can make excessive profits
  - - - By restricting competition
    - - By restricting market supply, can control prices and force high market price
    - - To cut costs and maximise profit or as there is no competition, there is no incentive to improve quality.
    - - X-Inefficiency
      - May make less effort to efficiently use resources without competition
    - - These resources could have been put to more productive use
  - - - Economies of scale
        
        A firm has a natural monopoly when it can produce the entire market supply at a lower average cost
      - Capital size
        
        It may be difficult for new firms to acquire the necessary amounts of capital
      - Historical reasons
        
        There may be a monopoly as the business has entered the industry early and built up a customer base
      - Legal considerations
    - - Destructive or predatory pricing
      - Restricting supplies to competitors
      - Exclusive dealing
      - Tying/bundling