Market Structures

Dr. Carlos L. Manapat

 Pure Competition
• Many buyers and sellers and none can
influence the market
• Products and services offered are
homogenous
• Free entry and exit of firms in and out of the
industry
• If you add perfect knowledge pure
competition becomes perfect competition
 Monopolistic Competition
• One unique seller with loyal customers
• Product or service is differentiated
• Free entry and exit of firms in and out of the
industry
 Oligopoly
• There are a few sellers that may “collude”
• They may form a “Cartel” after collusion
• Entry and exit is restricted
• Products and services are differentiated
 Monopoly
• One seller who represents the industry (Price
Maker)
• One product or service with no close
substitutes
• No entry for new sellers and no exit for
existing seller
– Price discrimination
– Monopoly power
 Monopolistic
Pure Competition Competition Oligopoly Pure monopoly

No influence 100% influence

 Summary
Market Pure Monopolistic Oligopoly Monopoly
Structure Competition Competition
Number of Many Many but there Few One
sellers are distinct
sellers
Type of product Homogenous Differentiated Differentiated One product or
or service service with no
close
substitutes
Entry and Exit Free Free Restricted No entry and
of firms in and no exit
out of the
industry
Distinct Perfect Loyal Collusion may Price maker
Characteristic Knowledge Consumers form a cartel