The Four Types of Market Structure

Number of Firms?

Many
firms
One Type of Products?
firm Few
firms Differentiated Identical
products products

Monopoly Oligopoly Monopolistic Perfect

Competition Competition

• Tap water • Tennis balls • Novels • Wheat

• Cable TV • Crude oil • Movies • Milk
 Market
Structures
There are 4 types of
market structures:

• Perfect Competition
• Monopolistic Competition
• Oligopoly
• Pure Monopoly
 Perfect Competition
The 5 Characteristics of a
market that has perfect
competition:
1. Many buyers and sellers
2. All the products are identical
3. There are no price regulations in
the market
4. Sellers/Producers can enter and
exit the market very easily
5. Sellers and buyers have equal
information on the products
 Oligopoly
Characteristics of a
market that has an
oligopoly:
1. There are only a few
sellers/producers
2. Products can be identical or very
similar
3. The market is very difficult for
other producers to enter
4. Non-price competition exists
among buyers of the products
 Monopoly
Characteristics of a
market that has a
monopoly:
1. There is only one
seller/producer
2. There are no substitutes for the
product
3. No other sellers/producers can
enter into the market easily
4. The seller/producer has
complete control over the price
of the product
Four Main
Types of
Monopolies Geographical

Natural

Technological

Governmental