CHARACTERISTICS OF FOUR MARKET

STRUCTURE

Market Characteristics Advantages Disadvantages

Structure

Many firms Competition

Freedom of entry Encourage Efficiency
Pure Homogenous Optimal Allocation
Competit product of Resources
ion Normal profit Firms always
Price taker achieve Efficient
Perfect Allocation
substitutes Firms always
available achieve Efficient
No barriers to Production
entry and exist Non-Price
Profit Competition Cost
maximization Savings
Freedom to Choose
and Act

One firm Stability of Prices Exploitation

dominates the Source of Revenue of Consumer
market for the Goods Dissatisfied
Pure Barriers to entry Massive Profits Consumer
Monopol Possibly Monopoly Firms Higher
y supernormal offer some services Prices
profit effectively and Price
Price makers efficiently Discriminati
Non close on
substitutes Inferior
available Goods and
High barriers Services

Freedom of entry Buyers get plenty of Wasteful

and exit options Liable of
Monopol Firms The promotion of Excess
istic differentiated competition(lack of Allocate
Competit products Barriers to Entry) Inefficient
ion Many firms
 Small role of Differentiation Higher
determining price Brings Greater Prices
No entry and exist Consumer Choice Advertising
cost in the long and Variety
run . Product and Service
Quality
Development

An industry High Profits Difficult to

Oligopol dominated by a Simple Choices Forge a Spot
y few firms Competitive Prices Less Choices
Small role in Better Information Fixed Prices
determining price and Goods are bad for
Non price Consumers
competition No Fear of
Long run profit Competition