1. Market Structures Pure Monopoly Perfect Competition
Monopolistic Competition
Oligopoly

2. Characteristics of a Pure Monopoly
A single seller
No Substitutes
No Entry – market is protected by barriers of entry. Gov’t regulation, large investment, ownership of raw materials.
Almost Complete Control of Market Price - control supply of good or service.

3. Types of Monopolies Help avoid overlapping Government regulates price
Natural Monopolies
Help avoid overlapping
Government regulates price
Examples: Public Water, Utilities
Government Monopolies
Created by the government
Technology, patents, franchises, license
Geographic Monopolies
Walmart

4. Conditions of Perfect Competition
Large Market – numerous sellers/buyers
Similar Product – identical good or service
Commodities = a product that is the same no matter who produces it.
Easy Entry and Exit – sellers can NOT prevent competition. Initial costs of investment are small, and goods/services are easily learned.
Start-up costs and the internet

5. Conditions of Perfect Competition
Easily Obtainable Information – information about prices, quality, and sources of supply is easy for both buyers and sellers to obtain.
No Control Over Price – the workings of supply and demand control the market.

6. Characteristics of Monopolistic Competition
Numerous Sellers – no one dominates
Relatively Easy Entry
Differentiated Products – slightly different products to attract customers.

7. Characteristics of Monopolistic Competition
Nonprice Competition – advertising, physical characteristics, location, service level
Some Control Over Price
Toothpaste, most neighborhood businesses

8. Characteristics of an Oligopoly
Domination by a Few Sellers
Top sellers account for 80%
Barriers to Entry
Sometimes created by gov’t
Identical or Slightly Different Products

9. Characteristics of an Oligopoly
Nonprice Competition – minor differences in product
Limited Control Over Price – price wars, price fixing, collusion
Example of Oligopoly – The Airline industry