The paper "Characteristics of the Market Structures" is an engrossing example of coursework on macro and microeconomics. All firms aim to maximize profits from their output by ensuring marginal Revenue is equal to marginal cost. However, practically they operate in different economic and business environments. These environments may be based on the prevailing market conditions, which influence how the firm will make decisions affecting its behavior. Various characteristics are common to some firms or markets, for example, the average strength of sellers or/and buyers, their, number, the level of collaboration among them, the competition between them, product differentiation, the level of difficulty to enter or exit the market, among many more.
The four categories of market structures have different characteristics. This paper seeks to discuss the key characteristics of the four market structures. Additionally, the paper will evaluate the concept of negative externalities. Monopolistic competition Monopolistic competition is a market structure with many sellers of a certain commodity; however, the product of each differs from one seller to another. Consequently, one of the key attributes of a monopolistic market is product differentiation. Product differentiation can be described as a salient characteristic of monopolistic competition.
It basically implies that at any particular time, the consumer should be provided with a wide range of brands, styles, types, and quality graduations of a given product. Product differentiation aims at enabling the buyers to distinguish between one product and another. Advertising is high as the firms strive to inform the consumers of the advantages of their special products. Firms aim at having their brand name easily recognized and develop consumer confidence in their products (Jain and Ohri, 2010). Firms within the monopolistic competition also have limited control over the price of the product.
The AR and the MR curves of the firms operating under the monopolistic market slope down as that of a monopoly, as indicated by figure 1.0. This implies that when a firm wants to sell more of its products it has to reduce its price per unit. The existence of product differentiation also enables a firm under monopolistic competition to have minimal control over the price of the product.
Anderton, A, 2006, Economics, FK publication
Baumol, W and Blinder, A, 2011,Microeconomics: Principles and Policy, Cengage Learning, .
Jain, T and Ohri, K 2010, Principles of Economics , FK publications .
Ghai and Gupta, 2002, Microeconomics Theory And Applications Sarup & Sons.
Hetherington, D, 2008, The Full-Cost Economics of Climate Change Aluminium: A Case Study, percapita.
Hall, R and Lieberman, M, 2008, Microeconomics: Principles And Applications. Mason, OH, Thomson/South-Western.
Hubbard, G. R., Garnett A. M., & O’brien A. P, 2014, Microeconomics, Australia, Pearson.
Hargroves, K and Smith, M. H, 2006, The Natural Advantage Of Nations Business Opportunities, Innovations And Governance In The 21st Century, London, Earthscan.
Mifflin , H, 2014 , Firms in the oligopoly market structure have a negatively sloping demand curve, Cliffs Notes.
Mukherjee, S, 2002, Modern Economic Theory. New Age International.
Tucker, I 2008, Microeconomics for Today, Cengage Learning.
Wyant, J, 2013, Basic Economics For Students And Non-Students Alike, Sage.