1. Pure/Perfect Competition

There are a large number of buyers and sellers in the market such that no single

transactor can influence, by its own individual action, the price-output decisions in the

market.

The transaction unit is homogeneous, the goods and/or the services traded are so

standardized and identical that no illogical buyers’ preference can emerge.

The buyers and sellers enjoy freedom of entry and exit no transport cost is involved. A

firm can enter profitable industry or can leave a losing industry just as a consumer can

freely move in or out of the market

There is independent decision-making no restriction or compulsion is involved in the

process of decision-making.

If perfect knowledge prevails such that there are zero information costs and if goods

and resources are information costs and if goods and resources are perfectly mobile and

divisible, then competition is designated as perfect. In a perfectly competitive market, a

single price rules the market.

2. Oligopoly

Market structure where only few sellers or producers dominate the entire industry, in

oligopoly the number of seller or producer is more than 1 and that is why it is not same

as monopoly.

In an oligopoly market structure there are only few companies but they are large when

it comes to the size of the companies.

Oligopoly is characterized by companies selling same goods and services or slightly

differentiated goods and services to the customers.

There are so few companies in an oligopoly that action of company influences the

decision of other company, in other words there is interdependence between the

companies in an oligopoly. So for example if one company decides to decrease the price

of a product, then other companies in the market will follow the other company.

There are some barriers to entry in oligopoly which helps the existing companies in

earning abnormal profits. However barriers to entry are not that much as in the case of

monopoly market structure.

3. Monopoly

A single seller has complete control over the supply of the commodity.

There are no close substitutes for the product.

There is no free entry and exit because of some restrictions.

There is a complete negation of competition.

Monopolist is a price maker.

Since there is a single firm, the firm and industry are one and same i.e. firm coincides

the industry.

Monopoly firm faces downward sloping demand curve. It means he can sell more at

lower price and vice versa. Therefore, elasticity of demand factor is very important for

him.

Examples:

4. Monopolistic Competition

Market structure where many sellers are there who sell differentiated products and

therefore have some monopoly when it comes to pricing of their products.

There are large numbers of independent sellers of the same product and therefore no

single firm or a company can set the price of a product, which is the reason it is not

same as monopoly.

Each seller of a product sells differentiated product, which implies that each company’s

product is different from other and therefore it is not same as that of perfect

competition where all the producers sells the same good.

Due to differentiated product each seller has some control over the price which the

seller can charge from its customers.

Marketing of a product or service assumes great importance under monopolistic

competition as the sellers can sell the product to its customers by showing them the

products differentiating characteristics.

Under monopolistic competition there are not many barriers to entry (which are present

in monopoly) and therefore any company can enter the market and compete with other

players in the market.