Market Structure

PERFECT COMPETITION

In perfect competition (sometimes called as pure competition) it describes that the participation of large number of sellers and buyers in the market and are not large enough in setting the price of homogeneous products. Every seller is said as the “price takers”. This means that the sellers cannot determine the price based on their own but must depends on the market situation, which strongly affected by the supply and demands. No entry and exit barriers make it extremely easy to enter or exit a perfectly competitive market. This is because perfect competition requires small investments to start the business.

mineral water

sugar

MONOPOLY (PERFECT MONOPOLISTIC)

A monopoly is a structure in which a single supplier produces and sells a given product. If there is a single seller in a certain industry and there are not any close competitors or substitutes for the product. They also called as price maker and profit maximize. Only the firm produce the product and decide the price for the service offered or the product to be sold. But, does so by determining the quantity in order to demand the price desired by the firm. To remain the situation, the seller must be able to restricted entry.

Astro

KTMB

OLIGOPOLY

Oligopoly is a market structure characterized by a small number of relatively large firms that dominate an industry. The market can be dominated by as few as two firms or as many as twenty, and still be considered oligopoly. Because an oligopoly firm is relatively large compared to the overall market, the price determination can be in 2 ways .the first is based on price leader and the other on is based on cartel. Based on price leader means that the competitors in a certain industry have to follow the price of the price leader (the company who dominant in the market in that industry). If the price is determined based on cartel, it is mean that the firm need to set the price of product or service based on the price stated on non-profit organization. A primary example of such a cartel is(Oil Producer Economic Country) which has a profound influence on the international price of oil.

Nestle

Nike

MONOPOLISTIC COMPETITION

Monopolistic competition is a market structure characterized by a large number of relatively small firms. While the goods produced by the firms in the industry are similar, slight differences often exist. As such, firms operating in monopolistic competition are extremely competitive but each has a small degree of market control. The four characteristics of monopolistic competition are:

(1) large number of small firms but not as large as Perfect Competition,

(2) similar, but not identical products,

(3) easy entry and exit the market, but not easy as Perfect Competition,

(4) extensive, but not perfect knowledge.

(5) the product can be differentiate either physically or psychologically, via branding and packaging.

Petron-Petronas-Shell

Air Asia and MAS Airlines