Q.
Identify the basic characteristics of monopoly (Nov’10, Nov’11 and Dec’13),
oligopoly, monopolistic competition, and perfect/pure competition.
Monopoly (Nov’10):
One firm
Complete barrier to entry
Total control over price
One product
According to Professor Brenham, “The
monopoly can fix whatever price he pleases or can sell whatever amount he
planes but he cannot sell as much likes whatever price he likes.” According to
Economist Stigler, “Monopoly is such a firm producing a commodity of which
there are no clause substitutes.”
Oligopoly:
2-3 firms
High barrier to entry
Control majority of output
Similar/identical products
Monopolistic
Competition (Dec’12):
Many Firms
Few artificial barriers to entry
Slight control over price
Differentiated products
Perfect
(Pure) Competition:
Many Buyers and Sellers
Identical Products
Informed Buyers and Sellers
Free Market Entry and Exit
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