WAGAN ANDREA MARIE A.

MKTG2A

1. Identify the types of structures. Give example of industries/companies under the structure .

Perfect Competition Market Structure: In a perfectly competitive market, the forces of supply
and demand determine the number of goods and services produced as well as market prices set
by the companies in the market.

Perfect Competition Examples

-Foreign exchange markets
-Agricultural markets
-Internet-related industries.

Monopolistic Competition Market Structure: Unlike perfect competition, monopolistic

competition does not assume the lowest possible cost of production. That little difference in the
definition leaves room for huge differences in how the companies operate in the market. The
companies under a monopolistic competition structure sell very similar products with slight
differences they use as the basis of their marketing and advertising.

Monopolistic Competition Examples

-Restaurants
-Hairdressers
-Clothing
-TV programs

Monopoly Competition Market Structure: Monopolies and completely competitive markets sit at
either end of market structure extremes. However, both minimize cost and maximize profit.
Where there are many competitors in perfect competition, in monopolistic markets, there's just
one supplier. High barriers to entry into the monopoly market leave a "mono-" or lone company
standing so there is no price competition. The supplier is the price-maker, setting a price that
increases profits.

Monopoly Competition Examples

-Microsoft and Windows
-DeBeers and diamonds
-Your local natural gas company.

Oligopoly Competition Market structure: Not all companies aim to sit as a single building in a
city. Oligopolies have companies that collaborate, or work together, to limit competition and
dominate a different market or industry. The companies under oligopoly market structures can be
small or large. However, the most powerful firms often have patents, finance, physical resources
which control over raw materials that create barriers to entry for new firms.

Oligopoly Competition Examples

-Steel industry
-Aluminum Film
 -Television
-Cell phone
-Gas

2. What are the characteristics of each structure?

Perfect Competition
-Under perfect competition, there are a large number of buyers and sellers in the market.
-Under competition, the firms have no control over the price. They have to sell the products at a
price predetermined by the industry.
-Under perfect competition, firms are free to exit and enter the market at any point in time. This
means that there is no obstruction for a new firm to produce a similar product produced by the
existing firms in the market
-Under perfect competition, firms can't charge high prices as both sellers and buyers have
perfect knowledge about the goods and their prices.
-Under perfect competition, The products offered by different firms are homogeneous. This
implies that buyers do not have any basis to prefer the goods of one seller over the goods of
another seller. The goods are similar in terms of quality, size, packing, etc.

Monopoly Competition
-Under Monopoly competition, there is only one firm producing the product. Being a single firm,
there is complete control over the supply and price of the product.
-There is no substitute for the products produced by monopolistic firms.
-Under Monopoly competition, there is a strong barrier for the other firms to enter the market.
Also, once a monopoly firm starts producing the product, no other firms produce the same.
-Being a single seller of the product, the monopolistic firm has full control over the price of the
product.
-The monopolist firm can sell different quantities of a similar product to a consumer at different
prices or the same quantity to different consumers at different prices by judging the standard of
living of the consumer.

Monopolistic Competition
-Under monopolistic competition, a large number of firms sell closely related products.
-Product Differentiation is an important characteristic of Monopolistic Competition. This
differentiation could be based on quality, packaging, color, etc. For example, you must have seen
different brands of shampoos. Even if they look different and have different fragrances, the
product has the same use.
-Under monopolistic competition, firms spend large amounts of money on advertisements of their
product to attract more and more customers. Every firm tries to promote its product through an
advertisement for which it bears some extra cost over and above its cost of production.
-Under Monopolistic Competition, firms compete with each other without changing prices. They
may initiate different program schemes, gift schemes, or promotional schemes Thus, firms
compete in every possible way to attract a large number of customers and gain maximum
possible market share.

Oligopoly Competition
 -In the oligopoly market, once prices of the products are fixed by the firms it is normally not
changeable. Hence, the price of the products is rigid.
-As there are very few firms in the oligopoly market, there is a tendency among them to
collaborate to avoid competition. They secretly meet each other to negotiate price and quantity.
The aim behind this is to maximize profit.
-In the oligopoly market, selling costs such as advertisement, promotion, sales, etc to sell the
product are determined by the firms.
-Interdependence is an important feature of the oligopoly market. As the number of firms in this
market is few, any strategy regarding the change in price, output, or quality of a product depends
on the rival’s reaction to its success. Thus, the success of a price reduction policy by one
company) will depend on the reaction of its rival. For example, if the company decides to lower
the price per bottle from Rs 12 to Rs 10, the effect of this step on demand for Pepsi will depend
on the counter-strategy of the other company i.e. Coke. If Coke decides to lower the price from
Rs 12 per bottle to Rs. 8 per bottle, demand for Pepsi may decrease even below its initial level.

3. What are the barriers of each structure?

-Barriers to Entry Prohibit Perfect Competition

Many industries also have significant barriers to entry, such as high startup costs (as seen in the
auto manufacturing industry) or strict government regulations (as seen in the utility industry),
which limit the ability of firms to enter and exit such industries.
-Monopolistic Competition
The barriers to entry in a monopolistic competitive industry are low, and the decisions of any one
firm do not directly affect its competitors. The competing companies differentiate themselves
based on pricing and marketing decisions.
-Oligopoly
Contracts, patents, and licenses: It becomes difficult for new firms to enter the market when the
existing firms own licenses, patents, or exclusivity contracts. Loyalty schemes: Special schemes
and services help oligopolists retain customer loyalty and discourage new entrants who wish to
gain market share.
-Monopoly
These barriers include: economies of scale that lead to natural monopoly; control of a physical
resource; legal restrictions on competition; patent, trademark and copyright protection; and
practices to intimidate the competition like predatory pricing.

4. List different samples.