Essays on Similarities Between Monopoly and Perfect Competition Market Structures Essay

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The paper "Similarities Between Monopoly and Perfect Competition Market Structures" is a great example of a macro & microeconomics essay.   Monopoly and perfect competition clearly represent the two extremes along a continuum of the market structures. At one extreme is the perfect competition that represents the ultimate efficiency achieved through an industry with extensive competition and without market control. On the other extreme is a monopoly which represents the ultimate inefficiency caused by the absolute lack of competition as well as extensive market control. This implies that in a monopoly market structure there is a single seller referred to as monopoly who controls the supply-side of a market.

In contrast, perfect competition is a market structure represented where each firm has completely no market control. As a result, no firm within the perfect competition can control the market price (Antony & Cline 2005). Similarities between Monopoly and Perfect competition market structures Although monopoly and perfect competition represent the extremes of market structures, several points of similarity exist. For instance, they all minimize cost and maximize profits, thus both have the same cost function. In addition, both monopoly and perfect competition have the same shutdown decisions and they are assumed to face the perfectly competitive issues of markets. One major assumption that economists make when they undertake a comparison between monopolies and perfectly competitive firms is that marginal cost incurred in production by a number of small firms is equivalent to a given marginal cost of production incurred by a single large firm, at the entire and potential levels of output.

Such an assumption is basic because, without its application, it implies that the marginal cost curve to be illustrated for the monopolist could emerge to be totally different from all the curves which could be represented for a competitive industry.

Since they are different theoretically, it becomes impossible to consider that monopoly output will be less compared to the perfectly competitive output, thus the price for a monopoly will become higher.  


Antony, D & Cline, T., 2005, A Consumer Behavior Approach to Modeling Monopolistic Competition, Journal of Economic Psychology, 26, 797–826.

Andreas, K., 2006, Comparison of the models of perfect competition and monopoly under special consideration of innovation, University of Bradford.

Das, S.P, 2007, Microeconomics for Business, Sage Publications, New Delhi.

Sloman, J & Sutcliffe, M, 2004, Economics for Business, Prentice Hall, New York.

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