Competitive markets, monopolies, oligopolies as types of markets structures - Essay Example

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Competitive markets, monopolies, oligopolies as types of markets structures

It is evidently clear from the discussion that competitive markets are characterized by unlimited number of buyers and sellers, all trading on the same or similar commodity in a manner that the prices of the commodity are largely determined by the market forces. Therefore, a single individual or a small fraction of the buyers or sellers has little or no impact upon the price. Once the prevailing market forces set the price, buyers or sellers have no option but to go with the offered prices. Monopoly type of market structure refers to a market whereby there is little or no competition on the offered commodity. This means that the seller has a lot of authority and control over the market conditions such as price and supply. Some of the characteristics of monopolistic market structure include little quantity or absence of substitute products, large barriers to market entry, little or no competition, while seller has a great authority over market conditions, prices are determined by the seller, insignificant difference exists between the industry and firm. Oligopoly is a market structure whereby few sellers dominate the market. Unlike in monopoly form of market structure, oligopoly players can hardly make independent decisions since the other market players will react in response. Therefore, the decisions of one player are under the influence of the others. Few large firms characterize the market structure, each firm is appreciably large in comparison to the overall market, similar or close substitute products, and large barriers to entry. ...Show more

Summary

The researcher of this essay aims to analyze markets in the world that are not homogeneous but, rather, characteristic depending on the prevailing market conditions. Markets are defined depending on how market conditions structure the market…
Author : jonstamm
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