Market Structure Worksheet
Describe the characteristics clearly and completely for each of the market structures.
Characteristic
Market type
Concentration
High
concentration,
Product differentiation
Barriers to entry
many
buyers and sellers such that
Perfect competition
Low (Homogenous
no single can dictate market products).
No barriers to entry.
price.
Monopolistic competition
Few large firms.
Oligopoly
Medium concentration only
few sellers.
Slightly differentiated
products.
Highly differentiated
products.
Few barriers to entry.
High barriers to entry.
Low, products are not
Monopoly
Very low market
concentration, only one seller.
differentiated and there Very high barriers to entry.
are no substitutes.
OUTCOME ►
MARKET TYPE ▼
Market power?
From what?
Allocative efficient?
Why/why not?
Product differentiation?
Test: ________
Test: __________
Can firm earn Economic
profits?
Test:
Why/why not?
No market power.
(Power lies on the
Perfect competition consumer because they
are the ultimate decision
Do not exist, because of
very low market
power.
Homogenous products,
products are similar.
No, because of high
competition and low
margins.
makers).
Monopolistic
competition
No market power.
(Power lies on the
consumer).
Do not exist, because of
low market power.
Slightly differentiated
No, because of high
products. Product
competition and low
features vary.
margins.
Exist, because of high
market power.
Oligopoly
Highly differentiated
Market power exists;
products. Although
This is because there are
products serve the same
fewer sellers.
purpose, they do not
look alike.
Yes
Because of market
power as well as low
competition.
Very high market
power.
There is only one
Monopoly
company which dictates
prices, what to produce,
when to produce and to
Low, products are not
Yes
Exist, because of very
differentiated simply
Because of high market
high market power.
because there are no
power as well as zero
substitutes.
competition.
whom.
Describe Typical Market Strategies in this Market Structure
Market Structure
Perfect competition
Because of high competition, companies will attract customers by advertising, lowering their
prices as well as improving the product quality as well as its features.
Monopolistic
Because of competition, companies will focus on consumer loyalty, customer service, advertising,
competition
lowering their prices as well as improving the product quality as well as its features.
Because of low competition, companies will focus less on advertising and saving on marketing
Oligopoly
costs so as to improve business profits.
Companies will only distribute/sell to customers who offer good prices. There will also be absence
Monopoly
of advertising because of low competition.