Market Types: Oligopoly, Monopolistic And Perfect Market Structures

Market structures

When the term business is mentioned, the first idea that comes into our minds is profit. However, before that profit is earned, other sectors of the “business” must participate. Every business should at least have the product and the idea about who should buy the commodity. What the business is selling is not important now but the one who buys it (customer) is. The customer is what we generally refer to market in business. Thus, every business needs to be fully aware of the market it serves. Every business has its own type of customers hence it has its own market model known as the market structure. Based on this idea, in business economics we have four types of market structures namely; Monopoly, Oligopoly, Monopolistic Competition and Perfect Competition market structures. Let us briefly explain these market

Again, in both monopoly and oligopoly market structures there is no freedom of entry and in both, the firms involved have some control over the price. In both the monopolistic and perfect competition market structures, we have many sellers and buyers. Monopolistic and perfect competition market structures we also have easy entry and exist hence less barriers of entry and exist.

When contrasting the market structures, monopoly structure is different from the rest in that it has only one seller or producer. It is also in a monopoly structure where only a single seller enjoys the profits alone. Oligopoly is different from the other structures in that it is only where we have sellers who can cooperate together since forming cartels means they are ready to communicate so as to control the price of the product. The perfect competition market structure is different from the rest since it is only where both the sellers and the buyers have a perfect knowledge of the market.

The market structure I