There are three main features that distinguish between a perfect competition and monopoly market structure: the type of firm, the freedom of entry and the nature of the product (Sloman and Norris 1999, pg, 161).
A table of these features is contained in Appendix A. These two market structures are on opposite ends of the scale and consequently, the features and benefits of each structure vary quite dramatically.
Firms
In a perfectly competitive market structure, there must be many firms in the market competing for business. In contrast to this, within a monopoly there is only one firm operating in the market. A firm that is operating within a perfect market is referred to as a price taker. Duffy (1993, pg. 107) explains that a condition of working within a perfectly competitive market is that “a price taker cannot control the price of the goods it sells; it simply takes the market price as given.”
In a monopoly, the firm does not have to take the given price. It is able to search the market for the best price to charge relative to the demand for the product, profitability and availability of the resources for manufacture. This is particularly relevant when there is a shortage of supply. As there is only one seller of the product, consumers are forced to purchase the goods at a higher price. The International Encyclopaedia of Economics (1997, pg. 1041) states, “that the monopolist can unilaterally dictate the quantity, quality, and price of the good or service it provides.” This is in direct contrast to the fixed pricing structure of firms within a perfect competition market structure.
The Essay on Oligopolists Market Price Firms
... are four market structures in our economy today: Perfect competition, monopolistic competition, oligopolies and monopolies. This essay shall describe the oligopoly market. The ... of sales, not of price. There is also a factor of concern from the firms in an oligopolistic market - where the ... and is a method of competition between the firms, other than by price wars. The Kinked Demand Curve, is the ...
Entry Restrictions
Many variables can restrict entry to a market. There may be government regulations, patents, import/export restrictions or large investment and start up costs. It is the number of restrictions in place that determines the difference between the two markets. There is no restriction on entering a perfect competition market. Sloman and Norris (1999, pg. 161) explain that there is complete freedom of entry for firms and established firms are unable to stop new firms entering the market. On the other hand, access to a monopoly is completely blocked or restricted. The access to a monopoly may be restricted for various reasons such as government regulations, legislation or initial set-up costs.
Nature of Product
Within a perfect market Duffy (1993, pg. 107) describes the products sold as homogeneous since there is no differentiation between what the firms sell. A consumer is able to purchase the same product for a similar price from numerous suppliers. In a monopoly, the product is unique in that any other company does not supply that good in a similar fashion. The nature of the product is more to the monopolist’s advantage than that of the companies within a perfectly competitive market structure.
A monopolist has significant control over the services or products its provides due to the lack of competition. Due to the unique nature of the product a company provides, the monopolist is able to restrict the goods it supplies thereby increasing the price charged and the profit made. This is in direct contrast to a firm operating within a perfect competition market structure.
The Essay on Describe how marketing techniques are used to market products in two organisations
Describe how marketing techniques are used to market products in two organisations In this task I will describe how marketing techniques are used to market products in two different organisations in this case NHS and Nike. NHS The NHS was found by Aneurin Bevan on the 5th of July 1948 when he opened the Park hospital in Manchester; his ambition was to break a high standard of healthcare to ...
Bibliography
7. Duffy, John 1993, Economics, Cliffs Notes Inc, USA.
17. Sloman, J & Norris, K. 1999, Economics, Prentice Hall, Australia.
