The paper "Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly" is an engrossing example of coursework on macro and microeconomics. An economic market is a system where multiple parties engage in the exchange of services and products. The earliest forms of economic markets majorly involved barter trade. Market systems have evolved and the current systems make use of monetary value in exchange for services and products. Market systems are made up of a number of firms that produce homogeneous products. There exist four different types of market structures and they include; perfect competition, monopoly, oligopoly, and monopolistic competition.
This article will therefore base its contextual analysis on the four types of markets describing how each operates. This article will also highlight the strengths of each market over the other. The similarities and differences will be based on price and output determination. A monopoly is a type of market structure that is controlled by one seller and many buyers. The seller has the power to control the prices of the market. Perfect competition is an ideal market that is perfect as the name suggests.
In perfect competition, there is an unlimited number of consumers and producers. The demand curve is elastic and this indicates that every seller benefits from the conditions set. Oligopoly is a type of market that small firms control the greater percentage of the market and they control everything including prices among other demand variables. Monopolistic competition on the other side is a type of market where the firms have the freedom to enter or leave. The only difference from perfect competition is that in monopolistic competition, firms have differentiated products. Perfect competitionPerfect competition as already stated in the introduction segment is an ideal market.
A perfectly competitive market has features that cannot exist in the real world scenario (Tremblay and Tremblay 123). The features of a perfectly competitive market include; unlimited number of buyers and sellers, a flexible demand curve that is so perfect, freedom of entry to the market. The baseline in this type of market is that many of the sellers are offering identical products.
Boland, Michael A., et al. "Measuring the benefits to advertising under monopolistic competition." Journal of Agricultural and Resource Economics 37.1 (2012): 144-155.web
Hall, Robert E., and Marc Lieberman. Microeconomics: Principles & Applications. 6th ed. Mason, OH: South-Western Cengage Learning, 2013. Print
Tremblay, Victor J., and Carol Horton Tremblay. "Perfect Competition and Market Imperfections." New Perspectives on Industrial Organization. Springer New York, 2012. 123-143.print
von Stackelberg, Heinrich. "Market Structure and Economic Policy." Market Structure and Equilibrium. Springer Berlin Heidelberg, 2011. 85-94.print