Types of industrial markets. The model of perfect competition.
There are Four Market Models. From most competitive to least competitive: 1 Pure Competition (Involves very large numbers of firms producing identical products, standardized product, free Entry and Exit, No control over the price: "Price Takers", The individual firm has very little to no impact on the market, Demand is perfectly elastic). 2 Monopolistic Competition (Involves large number of firms, but not as many as in pure competition, Produces differentiated products (ie. clothing, furniture, books), Nonprice competition, Focuses mostly on advertising, brand names, and trademarks, Firms can easily enter or leave this market, although not as easily as firms in a purely competitive market, Limited control over prices, Imperfect Competition). 3 Oligopoly (Involves a few firms that exert considerable influence over the industry, Produces either standardized or differentiated products, NONPRICE COMPETITION: emphasis on product differentiation, Existing firms are strong rivals and affects each other's price and output, Control over price limited by mutual interdependence, Harder for a firm to enter or exit, A great deal of nonprice competition, especially with differentiated products). 4 Pure Monopoly: (Only one firm is involved, Products are unique with no substitutes, NONPRICE COMPETITION: mostly public relations, Entry of additional firms is not possible - one firm constitutes the entire industry, Entry to the industry is often blocked by government, It requires patent or licenses, Since the monopolist produces a unique product, it makes no effort to differentiate its product, Imperfect Competition, There is total control over price "Price Makers")
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