Comparing Market Structures

There are four types of market structures which are perfect competition, monopolistic competition, oligopoly and monopoly. Below is a table indicating their differences from each other.

 

Perfect Competition

A perfect competitive market has a large number of small competitors that have no market control. This competition is the ideal. This graph depicts the demand which has a horizontal meaning the price is unrealted to the quanity sold.

Monopolistic Competition
Monopolistic competition is a large number of small firms that compete with product differentiation through advertising. This graph shows the demand for a monopolistic competition. The demand is downward sloping indicating that is elastic. It means that the quantity is affected by the price of the product. An demand for an elastic product means that there are available substitutes.

Oligopoly

Oligopoly is a few large firms that have non-price competition through agreements made between both large firms. These agreements affect the quantities produced and the fixed price of the product. The graph illustrates the demand for an oligopoly market which is a downward slope. The market is inelastic as the change in price has no affect on the quantity demanded.

 Monopoly

A Monopoly market is made up of one firm that has control over the quantity produced and the price of the product. This market is very difficult to enter into. The graph shows a demand graph downwarding sloping for monopoly. The demand is

inelastic as the price has no affect on the quantity demanded.  The monopoly firms are able to make economic profits also in long-run.