Oligopoly Versus Monopoly Competition Essay - 1475 Words

i. Module Code : FC006 ii. Group : D iii. Module Title : Economics in an International Context iv. Assessment Title : Essay v. Assignment Title : Differences between oligopoly and monopolistic competition market structures. vi. Tutor name : Hind Francesca vii. Student ID : 200893206 viii. Date of submission : 15/3/2012 ix. Word Count : 986 Differences Between Oligopoly and Monopolistic Competition Market Structures Market structure refers to the interconnected characteristics of a market, which include the number of firms, level and forms of competition and extent of product differentiation (Business Dictionary, 2012). Based on these parameters, several market structures are defined and this essay†¦show more content†¦In short run, the firms can set the price high to obtain supernormal profit (represented by shaded region in Figure 2A). As the abnormal profit they make in short run attracts many potential rivals, the firms must then set the price low to stay competitive in long run (Figure 2B). For example, in Canada, the price of personal computers was very expensive when they were first introduced into the market, but as the number of computer manufacturers increased, the price of personal computers has been declining over the past decade (Figure 3; Statistics Canada, 2011). B B A A Cost Cost Price Price Figure 2. (A) Profit maximisation in short run in monopolistic competition. (B) Normal profit making in long run in monopolistic competition (Bized, 2001). Figure 3. Change of computer price by different purchasers. (Statistics Canada, 2011). Mode of competition is also different between the firms in oligopoly and monopolistic competition. Oligopoly is characterized by imperfect competition, mainly due to high barriers for entry to market (Economics Online, 2012). This is due to various reasons including exclusive resources ownership, extensive relevant knowledge, patent and copyright, other government restrictions, managerial challenge and high start-up cost (Economics Online, 2012; Amos Web, 2012). Airline industry is a typicalShow MoreRelatedThe Market Structures Of A Market Structure962 Words   |  4 PagesTherefore, a comparison and contrast is necessary to distinguish each of these theories from one another. These market structures of the economy are perfect competition, monopoly, monopolistic competition, and oligopoly. These market structures will reveal the difference and similarities that each one has. Firstly, the perfection competition is a market structure that has four assumptions that define what it is to be in this market. 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