There are four main .market structures: .perfect competition, .monopolistic
competition, .oligopoly and .monopoly.
.Perfect .competition indicates a . .market .structure, in which a plenty
number of small firms compete against each other. Moreover, companies do not have
a significant influence on power of market. Consequently, the manufacture generally
produces the absolute l level of production, which in turn lead to market
has many buyers and sellers trading identical products so that each buyer and
seller is a /price taker.
.Perfect competition relies on
the following elements:
firms are focused to maximize profits.
The goods offered by the various sellers are largely the same.
There are not specific preferences between different sellers. It does
not matter for the customer from which firms buy the products.
All firms have free access and exit to the market.
There is perfect information and knowledge about homogenous products.
At present, according to Nelson
statistics, 3885567619 out of the global population 7519028970 people use the
internet. Approximately 3.9 billion internet users are both producers and
consumers. The above mentioned example indicates that the internet is a market,
where a myriads number of consumers/producers operate without any influence on
market power which in turn lead to equal opportunities in this market,
exemplifying one of the features of perfect competition.
.Internet related industries.
The internet has a strong influence on perfect competition market due to the
fact that the internet has made the way of comparison and check prices easily,
quickly and efficiently (perfect information). Consequently, selling any kinds
of good on the internet through a service such as Alibaba, Aliexpress and E-bay
is extremely similar to perfect competition. For instance, it is becoming more
and more popular to use the above mentioned online magazines to compare prices
of any types of product and buy cheaper ones.
Like perfect competition online
magazines namely Alibaba, Aliexpress and E-bay relies on the following elements:
.There also a large number of sellers.
.Perfect information and knowledge. It is easy to compare the prices of goods.
.There are no significant barriers to entry and to exit to the market.
.Monopolistic competition is a
type of market structure consisting of many small companies that produce
differentiated products and free entry to the market and exit from the market.
The products of these firms are close, but not completely interchangeable, it
means that there is a difference in price, features, branding and marketing.
differentiating the product, the monopolistic competitor reduces price
elasticity. Raising the price, the monopolistic competitor is not deprived of
all consumers, as it happens in the conditions of perfect competition. The
market is somewhat narrowed, but there remain those who steadily prefer the
products of only this manufacturer.
.Monopolistic competition relies
on the following elements:
availability of many sellers and buyers (the market consists of a large
number of independent firms and buyers);
free access to and exit from the market (no barriers that keep new firms
from entering the market leaving the market);
Differentiated, .differentiated products offered by competing firms. Moreover, products
may differ from one another in one or a number of properties (for example, in
perfect awareness of sellers and buyers about market conditions;
influence on the price level, but in a rather narrow framework
of monopolistic competition:
of the most convenient example for the monopolistic competition is washing
are quite a few different companies in Poland such as, Ariel, Tide, Ares,
Perwoll, Lenor, Vizir, Perlux, Maxi trat, FF, Persil, Losk, Surf, Bio Power,
Origami and so forth. As
a result, for
the production of new varieties of detergent powders it is not required to
create a large enterprise. Therefore, if firms producing powders will receive
large economic profits, this will lead to the inflow of new firms into the
industry. New firms will offer consumers washing powder of new brands,
sometimes not much different from those already produced (in a new package,
another color or designed for washing different types of fabrics).