This document discusses and compares the four main types of market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. It provides examples and characteristics of each type. Perfect competition involves many small firms with no control over prices. Monopolistic competition is similar but firms sell differentiated products. Oligopoly is dominated by a small number of firms that can cooperate or compete. A monopoly gives a single firm control over the entire market.

1. MARKET STRUCTURE
AND ITS COMPARISION
BY: Vedant Singh
Class : BTM 2nd sem Submitted to : Dr. Kishan Rathore

2. The Four Types of
Market Structures
T h e r e a r e q u i t e a fe w d i f fe r e n t m a r ke t s t r u c t u r e s
t h a t c a n c h a ra c t e r i ze a n e c o n o my. F o u r b a s i c
t y p e s o f m a r ke t s t r u c t u r e s f i r s t : p e r fe c t
c o m p e t i t i o n , m o n o p o l i s t i c c o m p e t i t i o n ,
o l i g o p o l y, a n d m o n o p o l y. E a c h o f t h e m h a s i t s
o w n s e t o f c h a ra c t e r i s t i c s a n d a s s u m p t i o n s ,
w h i c h i n t u r n a f fe c t t h e d e c i s i o n m a k i n g o f f i r m s
a n d t h e p r o f i t s t h e y c a n m a ke .

3. Perfect Competition
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P e r fe c t c o m p e t i t i o n d e s c r i b e s a m a r ke t s t r u c t u r e ,
w h e r e a l a r g e n u m b e r o f s m a l l f i r m s c o m p e t e a ga i n s t
e a c h o t h e r. I n t h i s s c e n a r i o, a s i n g l e f i r m d o e s n o t
h a v e a ny s i g n i f i c a n t m a r ke t p o w e r. A s a r e s u l t , t h e
i n d u s t r y a s a w h o l e p r o d u c e s t h e s o c i a l l y o p t i m a l
l e v e l o f o u t p u t , b e c a u s e n o n e o f t h e f i r m s c a n
i n f l u e n c e m a r ke t p r i c e s .

4. FR
Monopolistic Competition
M o n o p o l i s t i c c o m p e t i t i o n a l s o re fe rs t o a m a r ke t
s t r u c t u r e , w h e r e a l a r g e n u m b e r o f s m a l l f i r m s
c o m p e t e a ga i n s t e a c h o t h e r. H o w e v e r, u n l i ke i n
p e r fe c t c o m p e t i t i o n , t h e f i r m s i n m o n o p o l i st i c
c o m p e t i t i o n s e l l s i m i l a r, b u t s l i g h t l y d i f fe re n t i a t e d
p r o d u c t s . T h a t g i v e s t h e m a c e r t a i n d e g r e e o f m a r ke t
p o w e r, w h i c h a l l o w s t h e m t o c h a r g e h i g h e r p r i c e s
w i t h i n a c e r t a i n ra n g e .
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5. FR
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Oligopoly
An oligopoly describes a market structure that is dominated by
only a small number of firms. That results in a state of limited
competition. The firms can either compete against each other or
collaborate. By doing so, they can use their collective market
power to drive up prices and earn more profit.
To give an example of an oligopoly, let’s look at the market for
gaming consoles. This market is dominated by three powerful
companies: Microsoft, Sony, and Nintendo. That leaves all of them
with a significant amount of market power.

6. FR
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Monopoly
A monopoly refers to a market structure where a single firm
controls the entire market. In this scenario, the firm has the
highest level of market power, as consumers do not have any
alternatives. As a result, monopolies often reduce output to
increase prices and earn more profit.
From the perspective of society, most monopolies are usually
not desirable, because they result in lower outputs and higher
prices compared to competitive markets. Therefore, they are
often regulated by the government

7. FR
Comparison of Market Structures
BASIS
PERFECT
COMPETETION
MONOPOLISTIC
COMPETETION OLIGOPOLY MONOPOLY
No. of Firms Many Many A few dominate One
Variety of Goods None Some Some None
Control over Prices None Little Some Complete
Entry / Exit None Low High Complete
Examples Wheat, shares of stock Jeans, Book Cars, Movie studio Indian railways, defence
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