The competitive market and the monopolistic structure are polar cases. Usually, markets do not exhibit the competitive or the monopolistic behaviour. In retail trade and in services, most firms have some influence over prices. Most modern industries that are dominated by large firms contain more that one firm. But the number of firms is low and the existing firms can control the market conditions (determining their quantity and their price in order to avoid new entry and to obtain positive and relatively high profits without any competitive threat). This is given by the market power of the existing firms. An oligopolistic firm faces a few competitors. The number of competitors is small enough for each firm to realize that its competitors may respond to anything that it does and it should take such possible responses into account. Therefore, oligopolists are aware of the interdependence among the decisions made by the various firms in the industry, and they engage in a rivalry behaviour that is strategic. That means that firms take explicit account of the impact of their decisions on competing firms and of the reactions they expect competing firms to make. In contrast, firms in perfect competition engage in nonstrategic behavior because they make decisions based on their own costs and their own demand curves without considering any possible reactions from their large number of competitors. Most firms in imperfectly competitive (oligopolistic) markets sell differentiated products. In such industries, the firm itself must decide on what characteristics to give the products that it will sell. In such markets, firms set their prices and then let demand determine sales. Changes in market conditions are signalled to the firm by changes in the quantity that it sells at its current price. The imperfect market structures as oligopolistic markets are studied in industrial and organizational economics throughout the theory of game developing strategic and in general confrontational behaviours of a few numbers of competitors in an interdependency context.
An alternative view on the market economy:
