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Essay sample - What are the main differences between Monopolistic Competition and Oligopoly market structures?Which of these market structures best serves the interests of the consumer and why?
Pages 4 (1004 words)
In the short run the firms operating in monopolistic market can act as monopolies but in the long run the other firms enter into the market and the gains of differentiation takes the downward sloping curve with competition…
In this type of market structure the firm takes the price charged by the competitors as given and does not take into consideration the impact of its price on that of competitors. In the short run the firms operating in monopolistic market can act as monopolies but in the long run the other firms enter into the market and the gains of differentiation takes the downward sloping curve with competition.
Oligopoly is regarded as the market structure where there are large firms operating in the market with significant barriers to entry. The oligopolists are aware of the conditions prevailing in the market as the market is dominated by only few sellers. The decision undertaken by one firm will influence the other firms operating in the market as well as the market as a whole. The decision or the responses of the market participants should be taken into account in the planning process. The prevailing competition in the market structure can give rise different outcomes. An operating firm in the oligopolistic firm can maximise the profit by operating at the level where marginal revenue is same as marginal costs. Differences The primary differences between the two types of market structures are in terms of relative size and control of the market of each firm on the basis of the number of competitors in the existing market structure. ...
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