MARKET TYPE

MARKET TYPE

1. MONOPOLY

   • The monopoly is a market structure where there is a single supplier of a certain good or service, that is, a single company dominates the entire supply market.
   • Features: A single product/seller. Consumers find themselves with a single product that is also offered by only one vendor. In this way, they have no other alternatives to choose from. The product or seller can (and usually does) influence the market price and quantity. This occurs since there is no competition in the market, so the offering company can act on the price based on its interests. There are no substitute goods. In this case, the consumer cannot choose a substitute good that subtracts market power from the monopolistic company. Fea
   • Causes of monopoly: Control of a resource or productive factor. When a company or government wishes to have absolute control of a resource or a certain productive factor, it makes use of a monopoly. In this way the power over the matter in question is ensured. Existence of economies of scale. When there are economies of scale that are unattainable for any other company in a reasonable period of time, a barrier to entry is generated that leaves the company that offers the services or products of that market niche alone.

2. OLIGOPOLY

   • An oligopoly is a market structure in which there are few relevant competitors and each of them has some ability to influence the equilibrium price and quantity.
   • Features: Small group of producers: That is, there are few producers, distributors or sellers of a particular good or service. Producers can influence the market price and quantity: As there is little supply, all demand must go through them, so they have great market power. That is, they can control the offer and, in this way, influence the price. There are often barriers to entry for new producers: Since they want the power of these select few to prevail, they have to limit access to all those who want to grab a piece of the market
   • The following forms of oligopoly are generally distinguished: two-sided oligopoly. In this type of situation, there are not only few bidders for the market, but also a reduced audience for which they must compete, that is, few companies and few consumers. demand oligopoly. Also called oligopsony, it consists of the inverted version of oligopoly: there are many suppliers and few demanders, so that it is the consumers who exert influence over the market. Duopoly. It is about oligopolies of only two competing companies, so it constitutes an intermediate step between oligopoly and monopoly.

3. DUOPOLY

   • A duopoly is a model of competition in a market characterized mainly by the existence of two production companies that control the entirety of a specific market, especially thanks to the joint fixing of prices.
   • Features: The duopolists decide to act jointly when setting their prices is equivalent to the effect that the decisions have in the practice of a single monopolistic company. Another characteristic of the duopoly to be highlighted is that the products placed on the market by these two companies are usually very similar in terms of use, value, consumer perception, etc. In other words, this type of phenomenon usually appears in very homogeneous product markets (especially in the industrial field).
   • Duopolies can be classified as follows: Cournot model: Based on the interaction between the two competing companies, which are directly affected by changes in the production of the other. In other words, they work according to the supply decisions of their direct competition. Bertrand model: When the interaction is centered on the game produced with the price levels of these firms, in such a way that both firms function independently.