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Writing - Essay Example

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Monopoly and perfect competition are the perfect representations of extremes in the structure of the economic market conditions, with the monopoly referring to the market condition where a single seller firm has the dominance and control of the market, while perfect competition…
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Download file to see previous pages... Therefore, there are several characteristics that compare the monopoly and the perfect market.
First, in the perfect market, there are many small firms which are more or less the same size competing to sell in the available market (Colander, 18). This is similar to the monopoly market, where there are many small firms that are operating in the market, but there is one big firm that controls a large share of the market. The second comparison between the perfect market and the monopoly market is that; the firms in the market are dealing in identical products, such that the basis of the competition in this market is not on the branding and differentiation of the products, but on the basis of commodity prices (Colander, 22). The third aspect that compares the monopoly and the perfect market is that there is free entry and free exit into the market, such that both the firms operating in the perfect market and those operating in the monopoly market are not restricted to enter and compete with the firms already existing in the market (Colander, 35). Additionally, the cost of leaving the market for the firms is lower, since the competition in the market is high, allowing the firms to be pushed out of the market easily. Finally, the perfect and the monopoly markets compare in the sense that there is perfect knowledge in both markets, although not in equal measures (Colander, 51). This simply means that the sellers and the buyers in the market have access to full information regarding how the market operates, and thus they are able to make purchase or selling decisions based on this full knowledge.
The contrast between the perfect market and the monopoly market is based on the fact that; in the perfect market, resource mobility is high, but the resource mobility is low in the monopoly market (Colander, 84). Another contrast between the monopoly and the perfect market is that in the perfect market, all the ...Download file to see next pagesRead More
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