This document outlines different market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. It provides characteristics of each structure. Perfect competition is defined by many small firms, homogeneous products, free entry and exit. Each firm is a price taker and will sell all it can at the market price. A monopoly has a single seller that is not a price taker and can influence the market price through output adjustments. Monopolistic competition has many differentiated products with easy entry. Oligopoly has few interdependent sellers offering similar products, where cooperation could allow profit-maximizing behavior like a monopoly.

2. • Pure Competition or Perfect Competition
• Monopoly
• Monopolistic Competition
• Oligopoly

4. • Many independent firms
• Each seller is small relative to the whole market
• Homogeneous (identical) product
• Easy entry and exit (no barriers to entry)

5. The perfectly competitive firm is said to be a price-
taker, because it takes the market price as given and
has no control over the price. Why?...

6. If the firm tried to charge a higher price, it would lose
all its business. Customers could go elsewhere to buy
the same product for less.
Since the firm is very small, it can sell as much as it
wants at the market price. So there’s no reason to
charge a lower price.

7.  A perfectly competitive market must meet the
following requirements:
– Both buyers and sellers are price takers.
– The number of firms is large.
– There are no barriers to entry.
– The firms' products are identical.
– There is complete information.
– Firms are profit maximizers.

8.  Monopoly is a market structure in which a single firm
makes up the entire market.
 Monopolies exist because of barriers to entry into a
market that prevent competition.
 Barriers to entry include legal barriers, sociological
barriers, and natural barriers.

9.  Many buyers
 Only one seller i.e. not a price-taker
 (Homogeneous product)
 Perfect information
 Restricted entry (and possibly exit)

10.  The monopolist’s demand curve is the (downward
sloping) market demand curve
 The monopolist can alter the market price by
adjusting its output level.

11. Monopolistic competition is a type of imperfect
competition such that many producers sell products
that are differentiated from one another (e.g. by
branding or quality) and hence are not perfect
substitutes.
A market situation in which a large number of firms
produce similar but not identical products
Entry into the industry is relatively easy

12.  Characteristics of monopolistic competition
 Significant number of sellers in a highly competitive
market
 Differentiated products
 Sales promotion and advertising
 Easy entry of new firms in the long run
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13. Because of the few sellers, the key feature of oligopoly is the
tension between cooperation and self-interest
Characteristics of an Oligopoly Market
Few sellers offering similar or identical products
Interdependent firms
Best off cooperating and acting like a monopolist by
producing a small quantity of output and charging a
price above marginal cost
MARKETS WITH ONLY A FEW SELLERS