Compare and contrast perfect competition and monopolistic competition - Essay Example

Add to wishlist

Summary

The market price is not controlled by a particular business under monopolistic competition this is because there are several players in the market and they produce different products. The barriers to entry and exit are really few when it comes to monopolistic competition. The…

Download full paper File format: .doc, available for editing

GRAB THE BEST PAPER98.4% of users find it useful

Compare and contrast perfect competition and monopolistic competition

Read Text Preview

Subject: Macro & Microeconomics
Type: Essay
Level: Masters
Pages: 1 (250 words)
Downloads: 4
Author: kubchance

Extract of sample "Compare and contrast perfect competition and monopolistic competition"

Client’s 11 October This paper will shed light upon the major differences between perfect competition and monopolistic competition. The market price is not controlled by a particular business under monopolistic competition this is because there are several players in the market and they produce different products. The barriers to entry and exit are really few when it comes to monopolistic competition. The price is controlled to a certain extent by producers under monopolistic competition. Independent decision making is a very important characteristic of monopolistic competition.

Positive profits are pursued by firms and they enter in numbers under monopolistic competition. Perfect competition on the other hand has some really fine differences, the entry and exit barriers are zero under perfect competition. Perfect mobility which refers to zero transaction cost is another very important feature of perfect competition. Profit maximization is the sole aim when it comes to perfect competition. Infinite sellers and buyers show their willingness to sell and buy products at a certain price under perfect competition.

"Prefect competition is a market in which there are many firms selling identical products with no firm large enough, relative to the entire market, to be able to influence market price". (Perfect Competition) These were some of the major differences between perfect competition and monopolistic competition. ReferencesPerfect Competition (2011). Economics Concepts. Web. Retrieved from:

CHECK THESE SAMPLES OF Compare and contrast perfect competition and monopolistic competition

Market Structure

There are three forms of an imperfect market: Monopolistic Competition: Under this structure, there are few sellers as comparedwith perfect competition and the products produced are differentiated due to branding, which gives the producer a way to have his own pricing policy and thus can earn more than normal profits (“Dewett, 1983”).... Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure....

10 Pages (2500 words) Research Paper

Form of market structure: Monopoly

nbsp; Another key point in this article is that the concept of a monopoly is changing as economists have come up with new terms such as oligopoly and monopolistic competition.... The new concepts of perfect competition and oligopoly are gaining support due to the benefits of competition for the society as a whole.... However, today the economists are viewing the concepts of competition and monopoly differently.... The argument against monopoly is that in the absence of competition, monopolies can charge whatever they want and the charged prices are usually higher than the prices under perfect competition....

3 Pages (750 words) Essay

The Way the UK Competition Authorities Utilise Non-Economic Policy Goals to Develop Competition Law

One of the most eminent economists of the 20th century, Frederich von Hayek, stated that: "The functioning of competition not only requires adequate organization of certain institutions like money, markets, and channels of information - some of which can never be adequately provided by private enterprise - but it depends above all on the existence of an appropriate legal system, a legal system designed both to preserve competition and to make it operate as beneficially as possible....

6 Pages (1500 words) Assignment

Monopoly as an Enemy to Good Management

monopoly and perfect competition and to a slightly lesser extent similar models along the vast range of economic models falling halfway between these extremes for example Oligopolies.... Perfect Competition represents the efficiency achieved by an industry which has extensive competition and almost no interference in the market forces either by the sellers or buyers or the government.... Monopoly on the other hand represents a rather inefficient means of market structure characterised by lack of competition and extensive market control....

5 Pages (1250 words) Essay

Comparing Perfect Competition and Monopolistic Competition

monopolistic competition is a market situation in which there are relatively large numbers of… The number of firms in monopolistic competition is fairly large.... Under the monopolistic competition, the firms sell differentiated products.... Essay One monopolistic competition monopolistic competition as the signifies is a blend of monopoly and competition.... monopolistic competition is a market situation in which there are relatively large numbers of small firms, which produce or sell similar but not identical commodities to the customers....

2 Pages (500 words) Essay

Analyzing Market Structures and Their Usefulness for Firms and Policymakers

The perfect competition and monopoly do not exist in the real world scenario because it is impossible to have large number of companies in a certain type of industry whereas, perfect information level can also not be maintained in the market and therefore, perfect competition is more like a standard with which other real economic systems are compared in order to determine their true economic nature.... The companies will most probably not operate in the perfect competition because it will cause their profitability to become compromised....

10 Pages (2500 words) Essay

Types of Market Structures

There are three forms of an imperfect market: Under this structure, there are few sellers as compared with perfect competition and the products produced are differentiated due to branding, which gives the producer a way to have his own pricing policy and thus can earn more than normal profits (Amacher & Pate, 2013).... The paper ends by studying the impact of international trade on the economy under A market is said to be in perfect competition when there are a large number of buyers and sellers perfectly aware of the market prices, and no firm is large enough to have any economic power over the industry (Amacher & Pate, 2013)....

10 Pages (2500 words) Essay

Economics as a Social Science

Classical economists deem competition as a highly desirable phenomenon but neoclassic economists suggested that perfect competition is an ideal model that is almost impossible to find in reality.... hellip; It is important to say that competition is actually a very good process that makes the market work efficiently.... rdquo; The participants have no intention to stabilise the market but their indulgence in competition achieves this end nevertheless....

7 Pages (1750 words) Coursework