MARKET TYPES ACCORDING TO COMPETITION.

MARKET TYPES ACCORDING TO COMPETITION.

1. MONOPOLISTIC COMPETITION

   • Monopolistic competition is a type of market structure where many companies are present in an industry, and they produce similar but differentiated products. None of the companies enjoy a monopoly, and each company operates independently without regard to the actions of other companies. The market structure is a form of imperfect competition.
     • FEATURES
       • the presence of many companies
       • Each company produces similar but differentiated products
       • Companies are not price takers
       • Free entry and exit in the industry
       • companies compete based on product quality, price, and how the product is marketed

2. PERFECT COMPETITION

   • A perfectly competitive market is a hypothetical market where competition is at its greatest possible level. Neo-classical economists argued that perfect competition would produce the best possible outcomes for consumers, and society.
     • FEATURES
       • There is perfect knowledge, with no information failure or time lags in the flow of information. Knowledge is freely available to all participants, which means that risk-taking is minimal and the role of the entrepreneur is limited.
       • Given that producers and consumers have perfect knowledge, it is assumed that they make rational decisions to maximise their self interest – consumers look to maximise their utility, and producers look to maximise their profits.
       • There are no barriers to entry into or exit out of the market.
       • Firms produce homogeneous, identical, units of output that are not branded.
       • Each unit of input, such as units of labour, are also homogeneous.

3. MONOPOLY

   • is a market structure in which there is only one producer /seller for a product. in other words the single businnes is the industry . entry into such a market is restricted due to high cost or other impediments ,which may be economic ,social or political
     • FEATURES
       • agents.
         • numerous buyers and a single product
         • COMPANY WITH MARKET POWER
       • barriers
         • there are barriers to the entry or exit of companies in the market.
       • Product
         • a unique product
         • no possibility of creating close substitutes
       • information
         • companies and consumers have incomplete information
         • there are transaction costs

4. OLIGOPOLY

   • In an OLIGOPOLY there are only a tew firms that make up an industry . this select group of firmas has control over the price and, like a monopoly, an oligopoly has high barriers to entry .the products that the oligopolistic firms ,produce are often nearly identical and therefore ,the companies ,which are competing for market share are interdependent as a result of market forces
     • FEATURES
       • There is a small number of producers: they have the power to decide price and quantity.
       • The product is homogeneous: or failing that, with little differentiation.
       • There is a great interdependence between the companies of the oligopoly: establishing different relationships between the companies that form it

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