COMPARISON OF MARKETS STRUCTURES

Factors Monopoly Oligopoly Perfect Competition Monopolistic Competition

1. Number of Only one seller for A few large sellers supply the Many sellers, and many Large number of sellers
sellers the entire market bulk of the industry output buyers
2. Degree of Zero competition Less competition regarding High degree f Relatively less price
competition price. Non-price competition competition competition when compared
exists to perfect competition. Non-
price competition exists
3. Price level Highest as there is Higher due to a lower level of As determined by the Depends upon the extent to
no competition competition market forces of demand which products can be
and supply. differentiated.
4. Knowledge of A monopolist Buyers are relatively better All buyers have perfect Buyers are aware of the
buyers about controls market. informed about market information about the market conditions.
the market Buyers are not conditions. price and the market
conditions much aware of the conditions.
market conditions.
5. Entry and exit There are high Relatively less barriers for There is a high degree of High degree of freedom to
barriers for other
traders to enter the market freedom for buyers and enter and exit.
traders to enter the sellers to enter or exit
market the market.
6. Control on price Monopolist Relatively less freedom to A seller in perfect Sellers have control over
determines the
decide the price. Because competition has to take price to some extent which
price. So he is athere is more than one that price which the depends upon the degree of
price maker. trader. Often there could be market decides for him. product differentiation.
a price-lobby among the So he is a price taker.
tellers to charge a particular
price.
7. Degree of There is only one Mutual interdependence Each seller is Each seller is independent
dependency seller. Dependency among bulk suppliers independent
among sellers question does not
arise.
8. Nature of Relatively inelastic There is kink in the demand Perfectly elastic Relatively inelastic or elastic
demand curve curve depends upon the degree of
product differentiation
9. Type of Unique Homogeneous or Homogeneous Differentiated
products differentiated
10. Individual firm’s Very high Reasonable high if there No control over price as Some control persists
control over even depending.
price
11. Consumer Least Relatively less Consumers are powerful Relatively higher as there is
sovereignty at they are fully informed a large number of firms
12. Choice for No choice Less Choice Customer is free to buy Maximum choice due to
consumer from any producer, but product differentiation
the product is
homogeneous
13. Predatory Does not apply Applies No chance Remote chance
pricing (a price
that will throw
the rivals out of
the market)
14. Economies of Occur Occur May not occur May not occur
scale
15. Relationship AR > MR AR > MR AR = MR AR > MR
between AR
and MR
16. Examples of Rare but found in In homogenous oligopoly, Rare but sometimes Branded foods, retail stores,
products / public utility agricultural products, raw found in the case of beauty parlours, etc.
services services such as materials, etc. In case of agricultural products, raw
Indian Railways differentiated oligopoly, materials, etc.
automobiles, detergents,
audio and video equipment,
refrigerators, etc.
17. Real life Rarely exists Commonly found Rarely found Commonly found
relevance