Analyzing Market Structures: Perfect Competition to Oligopoly Impacts

This essay provides an overview of various market structures, including perfect competition, monopolistic competition, monopoly, and oligopoly, highlighting their key characteristics such as the extent of product differentiation, ease of entry and exit, the level of competition, and the strength of sellers and buyers. It discusses how these structures impact pricing and competition, noting that in perfect competition, organizations sell identical products and are price takers, while monopolistic competition involves differentiated products and some control over pricing. A monopoly features a single seller with restricted entry, and an oligopoly is dominated by a small group of firms aware of each other's actions. The essay also examines the impact of market structure on managerial decisions, illustrating how managers must consider factors like transportation costs for perishable goods in competitive markets or brand preference in monopolistic markets, using examples such as potato vendors and Gillette razors.

Market structures

Market structure
 Market structure is defined according to the characteristics of the
market.
 Some of the important characteristics that market structure
considers are extent of product differentiation, ease of entry and
exit, level of competition, and strength of sellers and buyers.
 These characteristics affects the nature of pricing and
competition.

Types of market structure
Some of the types of market structure includes-
 Perfect competition
 Monopolistic competition
 Monopoly
 Oligopoly
 Duopoly

Perfect competition
 In this competition, all the organisation sells identical products.
 These organisations are price takers
 Each organisation have smaller market share
 It is also known as pure competition
 As the nature of product is same. It is featured by freedom of
entry and exit.


Monopolistic competition
 It is an type of impact competition where
one or more sellers sell the products which
are differentiated from each other but are
not perfect substitutes.
 In monopolistic competition, a organisation
takes the prices that can be changed by the
rivals.
 Customers are more inclined to particular
brand.

Monopoly competition
 It is a market situation where there is only one producer and
seller of a product.
 Entry in this market is restricted because of high costs or other
influences such as political, economic, and social.

Oligopoly competition
 It is the market situation where the industry is dominated by the
small group of firms.
 It is a market form where each oligopolists are aware of each
other actions.
 The decision of one organisation affects the other organisations
and is influenced by other`s decisions too.

Impact on Manager`s decision
 it depend on the nature of market structure in which it operates.
 For example- Potatos are sold in the market and it has
homogenous price regardless of who is the vendor. A manager
will always take into consideration the fix cost of damage causes
during transportation as it is perishable too.
 For instance- Gillette, a razor enjoys monopoly as every customer
purchases this brand.
 For instance- in monopolistic competition, shoes are
manufactured by many people but customers may prefer a
particular brand that provides comfort.

References
 Hoffarth, G. (2014). Unit 6: Market Structures. Retrieved from:
https://
ghoffarth.wordpress.com/introduction-to-economics/unit-5-marke
t-structures/
 Economics help, (2016). Perfect competition. Retrieved from:
https://www.economicshelp.org/microessays/markets/perfect-
competition/