There are four main types of market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly. Perfect competition is characterized by many small businesses, identical products, no barriers to entry or exit, and complete information. Monopolistic competition involves many businesses and differentiated products. Oligopoly describes a market with a small number of large competitors and potential for non-price competition. Pure monopoly is controlled by a single seller offering an unique product without substitutes.

1. The Four Types of Market Structure
Monopoly Oligopoly Monopolistic
Competition
Perfect
Competition
• Tap water
• Cable TV
• Tennis balls
• Crude oil
• Novels
• Movies
• Wheat
• Milk
Number of Firms?
Type of Products?
Many
firms
One
firm Few
firms Differentiated
products
Identical
products

2. Market
Structures
There are 4 types of
market structures:
• Perfect Competition
• Monopolistic Competition
• Oligopoly
• Pure Monopoly

3. Perfect Competition
The 5 Characteristics of a
market that has perfect
competition:
1. Many buyers and sellers
2. All the products are identical
3. There are no price regulations in
the market
4. Sellers/Producers can enter and
exit the market very easily
5. Sellers and buyers have equal
information on the products

4. Oligopoly
Characteristics of a
market that has an
oligopoly:
1. There are only a few
sellers/producers
2. Products can be identical or very
similar
3. The market is very difficult for
other producers to enter
4. Non-price competition exists
among buyers of the products

5. Monopoly
Characteristics of a
market that has a
monopoly:
1. There is only one
seller/producer
2. There are no substitutes for the
product
3. No other sellers/producers can
enter into the market easily
4. The seller/producer has
complete control over the price
of the product

6. Four Main
Types of
Monopolies
Natural
Geographical
Technological
Governmental