Market Structure

1. Oligopoly

1.1. In an oligopoly, there are only a few firms in the market. While there is no clarity about the number of firms, 3-5 dominant firms are considered the norm.

1.1.1. The firms in this case either compete with another to collaborate together

2. Monopoly

2.1. In a monopoly type of market structure, there is only one seller, so a single firm will control the entire market. It can set any price it wishes since it has all the market power.

2.1.1. Monopolies are extremely undesirable

3. This is a more realistic scenario that actually occurs in the real world. In monopolistic competition, there are still a large number of buyers as well as sellers. But they all do not sell homogeneous products. The products are similar but all sellers sell slightly differentiated products.

3.1. consumers have the preference of choosing one product over another.

4. In a perfect competition market structure, there are a large number of buyers and sellers. All the sellers of the market are small sellers in competition with each other. There is no one big seller with any significant influence on the market. So all the firms in such a market are price takers.

5. Monopolistic Competition