Market Structures 4 Different Types Perfect Competition Definition

Market Structures 4 Different Types

Perfect Competition Definition: Identical goods and services Characteristics: • Many sellers • NO control over price (NONE!!) • Easy to enter and exit the market Examples: Agriculture • Bananas • Corn • Wheat • Apples

Monopolistic Competition Definition: SIMILAR but not identical goods and services Characteristics: • Many sellers • A little control over price • Easy to enter and exit the market Non price Competition: • Heavy use of advertising Examples: Nearly everything we buy!!! • Books • Food • Clothes vs vs vs

Oligopoly Definition: Identical or similar goods and services Characteristics: • A few LARGE sellers dominate • Some control over price • Barriers to entry (licenses, patents, resource control) for new firms Examples: • Soda market • Banking • Gas Stations • Airlines • Cartel: act of creating a secret agreement to fix prices • Collusion: a group of sellers who come together to create a secret agreement to fix prices

Monopoly Definition: COMPLETELY UNIQUE goods and services Characteristics: • ONE seller (no competition, no substitutions) • LOTS of control over price • LOTS of barriers to entry for new firms Examples: Natural Monopoly • Utility companies • Natural Gas • Electric • Water company