Comparison between market structures

The Report considers whether order executions differ in markets with differing levels of fragmentation and customer order interaction.

Comparison between market structures

Now let us look at the graphs for each of the four firms. Perfect Competition In perfect competition demand is constant because no single seller or buyer can affect the market.

The sellers and buyers are price takers. Firms make only normal profit under these circumstances. There is zero economic profit and no firm is willing to enter into the market. As there is no economic loss, no firm is willing to exit the market.

Maximum efficiency is achieved due to the fact that the price is equal to the marginal cost. The price is set at the lowest point of average cost curve hence the firm is productively efficient. Monopoly In a monopoly, there is no competition and no near substitutes are available.

The firm is a price setter and the buyers are price takers. The firm can make an economic profit because the price is set in the elastic region and price is greater than the average cost.

The allocative efficiency is not achieved because price is set higher than the marginal cost. The price is not on the lowest point of the average cost curve therefore it is not productively efficient. Monopolistic Competition Below are short and long run graphs for monopolistic competition.

Related Questions

In the short run, the monopolistic competitive firms earn economic profit because price is greater than average cost.

Whereas in the long run, the firms only earn normal profit because the price equals to the average cost. The allocative efficiency is not met because the price is above the marginal cost. In both cases, it is not productively efficient because the price is not on the lowest point of average cost curve.

Expert Answers

Oligopoly In an oligopoly, there is a formally or an informally agreed price. The market is controlled by a handful of firms. The firms have substantial control over price. There is a kinked point in the demand curve where the demand curves D1 and D2 intersect. The D1 portion of the demand curve is elastic and D2 is inelastic.

Compare and contrast the market structures of oligopoly and monopolistic competition. | eNotes

The price does not change when the marginal cost is between points a and b. The oligopoly is not allocatively efficient because the price is set higher than the marginal cost.

We also know that we are not operating at the lowest average cost therefore it is not productively efficient. Posted by Sarbjeet at.Oligopoly is a market structure; monopolistic competition is another market structure.

Comparison between market structures

They compare in that each is a type of market structure. Both operate in markets with imperfect competition. Comparing Market Structures This is my last blog for this assignment and I am presenting a brief description of four types of firms in a tabular form as shown below and followed by a brief description of graphs for each type of firm.

Market structure is a classification system for the key traits of a market and a specific social organization that exists between buyers and sellers in a given market. In this essay, I will focus on the two market structures of monopoly and monopolistic competition. A firm under Perfect competition is a Price-taker, i.e.

an individual firm has no control over the price and has to accept the price as determined by the market forces of demand and supply. A monopolist is a Price-Maker, i.e., a firm has complete control over the price and fixes its own price.

A. Compare between different market structures market structure In economics, market structure is the number of firms producing identical products which are homogeneous. Compare between different market structures market structure In economics, market structure is the number of firms producing identical products which are homogeneous.

FOUR MARKET STRUCTURE COMPARISON