Market Structure

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4 types of Market Structure

Monopolistic Competition

Large number of producers but varied goods Few barriers to entry Some control over prices Increases market share through non-price competition to attract buyers, usually set themselves apart from competition to get noticed Rely on service, location, status and image

Oligopoly

Market/ industry dominated by just few firms that produce similar/ identical products Gives bigger producers advantage over smaller ones High barriers to entry Some control over prices Price leadership; dominant firm sets price, others follow suit Collusion:producers get together and make agreements on production levels and price Cartels formed

Monopoly

Market/ industry with single producer of a product that has no close substitutes Substantial control over prices- great market power, are price setters rather than price takers. Relatively rare in today's society as they often form and then break down 3 Legal types; Resource, Government-created, and Natural Monopolies.

Main topic

Perfect Competition

Most competitive market Many firms produce the same product Relatively rare Easy entry and access to information No control over prices Are price takers, not price setters Beneficial and highly efficient Start up costs create barriers