MARKET STRUCTURE - It is an economic model that helps economists examine the nature and degree of competition among businesses in the same industry. - The level of competition in a market has a major impact on the prices of products. The more sellers compete for your money, the more competitive prices will be. - It talks about how the market works in terms of different aspects. Types of Market Structures CHARACTERISTICS PERFECT COMPETITION MONOPOLISTIC COMPETITION OLIGOPOLY PURE MONOPOLY Many firms and proprietors entering the market Many firms selling similar but not identical products Few firms selling and offering goods and services Single firm that own and controls the business Free entry and exit Free entry and exit Entry and exit in the market is blocked There are barriers to entry and exit in the market Price Takers Price Makers Price Makers Price Makers Horizontal or Straight Demand Curve Demand Curve is downward sloping Kinked Demand Curve Demand Curve is downward sloping Low Capital & Investment so it doesn’t need a high capitalization High Capital and Investment needed High Capital and Investment High Capital and Investment is needed No need for advertising Has an incentive in advertising Has an incentive in advertising No incentive in advertising There is a large advantage against competitors if products and services are improved Minimal advantage on improving products and services Minimal improvement of products and services No intensive in improving products and services Businesses will continue as long as profit is possible Involves short term and long-term strategic plans Collusion and cartel among firms Includes legal, natural, and scale of economics as barriers to enter market
