Types of Market Systems

Types of Market Systems

1. Imperfect competition

2. Perfect Competiton

3. Imperfect competition

   • Monopoly
     • It can set any price it wishes since it has all the market power.
     • This firm is the sole producer of a product, and there are no close substitutes.
     • Consumers do not have any alternative and must pay the price set by the seller.
     • There is only one seller, so a single firm will control the entire market.
   • Oligopoly
     • There are only a few firms in the market.
     • They can collaborate with or compete against each other to use their collective market power to drive up prices and earn more profit.
     • The buyers are far greater than the sellers.
   • Monopolistic Competition
     • Es a market structure referring to a large number of small firms competing against each other.
     • The consumers have the preference of choosing one product over another.
     • The sellers can also charge a marginally higher price since they may enjoy some market power
   • Monopsony
     • The buyer has significant power in determining the price of the products produced.
     • Has only one buyer for a particular good or service

4. Perfect Competiton

   • There are an infinite number of competitors in the marketplace offering their products
   • There is no one big seller with any significant influence on the market.
   • All firms only have the motive of profit maximization
   • Perfect competition only exists in theory

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