Market structure creates market power and investment. The four market structures: Perfect competition, Monopolistic competition, Oligopoly and Monopoly, divides industries by (Sloman, Hinde and Garratt, 2010, p. 213) “the degree of competition.” Thus, a firm’s market structure depends upon its competition.
(Sloman, Hinde, Garratt, 2010, p. 213) “A market structure that has many firms producing identical products, price takers and has freedom of entry.” Thus, perfect competition has many firms producing similar or same products at different prices. Buyers and sellers do not influence pricings and, firms can enter the industry at any time.
(Sloman, Hinde, Garratt 2010, p. 214) “A market with quite a lot of firms with freedom for new firms to enter.” Thus, a monopolistic competition has many firms and has freedom of entry for other firms yet, product differentiation from other firms.
(Sloman, Hinde, Garratt 2010, p. 214) “There are only few firms and entry is restricted.” Meaning this market is limited in both, the firms and the entry of freedom.
Monopoly …show more content…
235) “there is freedom of entry for new firms” meaning ease to break into the market providing the same product, due to the entry freedom. Consumers (Sloman, Hinde, Garratt, 2010, p. 217) “Fully aware of price, quality and availability of the product.” Therefore, consumers benefit, as they know about the product when purchasing. Perfect competition cost is a (Sloman, Hinde, Garratt, 2013, p. 47) “price taker- raising prices would not sell and lose sales to its competitors.” Thus, firms have to accept the market price and raising prices has consequences. Also, (Sloman, Hinde, Garratt, 2010, p. 216) “consumers are price takers and they have no control over prices” meaning, consumers must pay at the set price and cannot change