Econ 1010 – Microeconomics

An Overview of the 4 Market Structures:

1. Perfect competition (Ch 11)
2. Monopoly (Ch 12)

3. Monopolistic competition (Ch 13)

4. Oligopoly (Ch 14)
– However, Ch 14 is not being taught.

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 1. Perfect Competition (Ch 11)
Perfect competition is a market structure with
 Many firms and many buyers
 All firms sell an identical product and have
identical Cost Curves from Ch 10.
 No restrictions on entry of new firms or exit of
old firms to the industry, in the Long Run
Only.
 Both firms and buyers are all well informed
about the prices and products of all firms in
the industry.
 PRICE TAKERS
 Examples include world markets in wheat,
corn, and other grains.
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 Monopoly is a market structure in which
2. Monopoly (Ch 12)
 One firm produces the entire output of the industry.
 There are no close substitutes for the product.
 PRICE SETTERS
 Face a Downward Sloping Demand Curve
Produces on the Elastic Portion of the Demand Curve
 Barriers to Entry

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 3. Monopolistic Competition (Ch 13)
Monopolistic competition is a market structure
with
Many Many firms (More than PC)
Each firm produces similar but slightly different
products—called Product Differentiation
Product Differentiation gives the firm it’s
Monopoly Power in SHORT RUN.
Ex. Big Mac vs A Whopper
No restrictions on entry of new firms
Example: Restaurant Industry Micro-Beer
Industry

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 4. Oligopoly (Ch 14)

Oligopoly is a market structure in which

A small number of firms compete. Holding 70% or more of the
market share. (2 to 5)
The BIG 5 Canadian Banks
Produce Both – Identical Products (Cement Plants) or
Product Differentiated Products (Molson's vs Labatt's Beer).
HUGE Barriers to Entry {Economies of Scale}.
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