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Perfect and Imperfect Competition - Coggle Diagram
Perfect and Imperfect Competition
Market Models
Pure Competition
Characteristics
"Price Takers"
No nonprice competition
No control over price
Very large number of firms
Standardized product
Very easy to enter and exit, no obstacles
Example: Agriculture
Purely Competitive Demand
Perfectly elastic demand
Firm produces as much or little as they wish at the market price
Demand graphs as horizontal line
Monopolistic Competition
Characteristics
Many firms
Differentiated products
Some control over price, but within rather narrow limits
Relatively easy to enter and exit
Nonprice Competition: Considerable emphasis on advertising, brand names, trademarks
Examples: Retail trade, dresses, shoes
Oligopoly
Characteristics
Few firms
Standardized or differentiated products
Control over price: Limited by mutual inter-dependence; considerable with collusion
Significant obstacles to enter
Nonprice competition: Typically a great deal, particularly with product differentiation
Examples: Steel, farm implements, auto
Monopoly
Characteristics
One company
Unique products, no close subs
Considerable amount of control over price
Blocked entry
Nonprice Competition: Mostly public relations advertising
Examples: Local utilities
Average, Total and Marginal Formulae
Average revenue
Revenue per unit
AR=TR/Q=P
Total