Their quality and characteristics don’t vary from one another. Homogeneous products: the products being sold in this market are perfect substitutes for one another.No single seller or producer is large enough to influence the market price.There exist a very large number of sellers willing to supply their products at given market prices.There exist a very large number of buyers.A good example is agriculture, where all rice farmers sell homogeneous products to consumers. Perfect competition refers to a market that has many buyers and sellers, many similar products, and many substitutes. Producers and consumers have no perfect information.Producers have some control over prices.Consumers assume that there are non-price differences among the products of competitors.There is not one firm that has total control over the price of the market.There are many producers and consumers in the market.Characteristics of Monopolistic Competition Consumers, nevertheless, usually have a preference between the two chains. Another example would be the fast-food industry, where a burger made by McDonald’s is quite similar to a burger made by Burger King from an economic standpoint. An example of this can be clothing, where marketing and branding are the main marks of distinction among different but apparently similar black shirts. This means that the goods are not perfect substitutes for one another, but they are close substitutes. The difference lies in branding or, in most cases, quality.

This is an imperfect competition in which several producers sell products that are different from one another.

There is a relatively small number of firms supplying the market.

Firms make abnormal profits in the long-run.

Profit maximization is a condition in this market.

Only a few firms operate in the market.

Good examples include industries such as oil & gas, airline, and automakers.

Under oligopolies, there also exist some entry barriers with which other enterprises have to contend. Pure monopolies are regulated by the government.Īn oligopoly market consists of a small number of relatively large firms that produce similar but slightly different products.There is a single seller that controls the whole market.There are very high barriers to entry for other firms.Price discrimination: monopolies can change both the price and quality of their products.For instance, water providers, natural gas, telecommunications, and electricity are often granted exclusive rights to service. Often, this market has many entry barriers. There are four types of economic market structures (organized form the least competitive to the most competitive):Ī monopoly is a market that consists of a single firm that produces goods that have no close substitutes.

Therefore, market structure describes the number of entities producing similar goods and services in a market, and whose structure is determined by the current competition in the market. Moreover, market structure outlines the nature of the competition and the pricing procedure in a market.

Market structure can be defined as the characteristics of a market, which can either be competitive or organizational.

Characteristics of a monopoly economics