Competition

Competition

Markets for different goods and services differ greatly in terms how competitive each market is.There are several basi market models:

Pure competition: many buyers and sellers, the products are homogenous, there is free entry and exit in and out of the market. There is also perfect information about prices. This model does not actually fit many markets in real world.

Monopoly: opposite of pure competition, there is only one seller producing unique product. This seller controls the price. There are barriers which keep other firms from entering the market.

Oligopoly: imperfect competition, between pure competition and monopoly, closer to monopoly, market is dominated by few large firms, they are protected by barriers to entry, products are very simmilar

Monopolistic competition: imperfect competition, between pure competition and monopoly, closer to pure competition, many small sellers and buyers, entry and exit are relatively free, products are differentiated. Brand names and advertising is very important. It is also the most common market type.