1. TYPES OF MARKET STRUCTURE
• Perfectly Competitive Market
• Less market power
• Price takers
• Goods are homogenous
• Free entry and exit
• Perfect Information
• Monopolistic Competition
• Many firms
• Free entry and exit
• Differentiated but highly substitutable product
• Oligopoly
• Small number of firms
• Product differentiation may or may not exist
• Barriers to entry
• Monopoly
• There is market power
• Single seller
• One product (limited or no good substitutes)
• Barriers to entry
Perfectly Competitive Markets
Price Taking
1. The individual firms sell a very small share of the total market output and, therefore,
cannot influence market price.
2. The individual consumer buys too small a share of industry output to have any impact on
market price.

2. Product Homogeneity
1. The products of all firms are perfect substitutes
2. Example
– Agricultural products
Perfect Information
1. Buyers and sellers have all the pertinent information necessary for them to make
decisions on buying or selling goods and services.
Monopolistic Competition
• Imperfect or Monopolistic Competition
– Many buyers and sellers
– Products differentiated
– Relatively free entry and exit
– Each firm may have a tiny ‘monopoly’ because of the differentiation of their
product
– Firm has some control over price
– Examples – restaurants, professions – solicitors, etc., building firms – plasterers,
plumbers, etc.
Water Refilling Station
• The 1980s saw proliferation of gadgets
and equipment to purify water.
• The purification was done mostly at
home.
• Only simple process of passing tap
water
through a filter.
• The 1990s added the sophistication of
water purification technology with the

3. entrance of bottled water. Raw water passed through 6-8 processes of treatment.
• The sophistication, along with packaging, branding, manufacturing costs, led to drinking
water being expensive.
• Water refilling stations provided a cheaper alternative. More than 3,000 stations are
estimated to have been put up in the country presently.
• Initially, customers came to stations with their own containers.
• Eventually, services extended free delivery of 5-gallon containers with free use of a hot
and cold dispenser provided a minimum weekly consumption is met.
• Some stations also sold different types of dispensers and smaller sizes of bottled water.
• There are no barriers to entry. In other words, there is free entry and exit.
• There is product differentiation. The station claims to offer water treatment different from
other stations through different technology. Thus, their treated water supposedly are
slightly different from their competitors.
• Products are substitutable with one another.
Oligopoly
The barriers to entry are:
1. Natural
– Scale economies
– Patents
– Technology
– Name Recognition
2. Strategic Action
– Flooding the market
– Controlling an essential input
Examples of oligopolistic structures:
• Supermarkets
• Banking industry

4. • Chemicals
• Oil
• Medicinal drugs
• Broadcasting
Mobile Cellular Phone Industry
Prior to 1995, landline telephone dominated the telecommunication sector. PLDT was
considered a monopoly back then.
In 1995, the Telecommunication Act of the Philippines (RA 7925) was enacted, setting
the policy for competition and liberalization of the telecommunication sector.
It opened up the paging and the mobile telephone business.
Strategic Actions
• Before SUNCELL entered the market, instead of
price being lowered, strategic actions were being exhibited to gain bigger shares of the
market
• *But still both players offered the same services for the same price.

5. The Telecommunication industry (landline) started out as a monopoly.
• As a whole, the mobile cellular phone market is a Oligopolistic market.
• Three Major Players
• Services are slightly differentiated
• There are barriers to entry
Monopoly
• Barriers to entry
1. Control of Inputs
– firm may own the total supply of a raw material that is essential in the production
of some product.
– DE BEERS / MERALCO
2. Economies of scale
– One supplier can produce at a lower per-unit cost than several smaller firms.
3. Patents
– Exclusive rights given to inventors for a limited period of time.
– AT&T / BELL COMPANY
4. Licenses/Franchises
– Granted by the government as a condition for operating in the market.
The monopolist is the supply-side of the market and has complete control over the amount
offered for sale.
Limited by Demand
Philippine Electric Power Industry