D1 Market Structures
Perfect competition is a market where there are many buyers and sellers of the same or very similar products. Consumers are fully aware of the range of choices available to them and as a result, competition is very high. An example is a food market. Barriers to entry are low in these markets due to low set up costs.
Monopoly markets exist where there is one dominant player in a market. A pure monopoly exists where there is only one seller and therefore the product is unique. An example is Google, who control over 60% of online advertising. Monopolies benefit from economies of scale and as a result it is difficult for competitors to enter the market.
Oligopoly markets exist where there a a few dominant players in the market. Examples include supermarkets, airlines and drug companies. Products provided are close substitutes but may have some different features to differentiate for different markets. Firms in oligopoly markets will avoid competing on price to avoid a price war but will embark on non-price competition instead. Set up costs in these markets are usually very high which results in high barriers to entry.
