Oligopoly, Monopolistic competition, Pure
Competition - March 24, 2009 at 22:30 PM by Manish
Explain - Pure monopoly, Oligopoly,
Monopolistic competition, Pure Competition.
Monopoly is a market situation in which
there is only one seller of a product with barriers to entry of
others. The product has no close substitutes. He is a price maker
who can set the price to his maximum advantage. This may occur
because the firm has a patent on a product or a license from the
government to be a monopoly .Pure monopoly occurs when the producer
is so powerful that he is always able to take the whole of all
consumers’ income whatever the level of his output is.
Oligopoly is a market situation in which
there are a few firms selling homogeneous or differentiated
products. It is difficult to pinpoint the number of firms in the
oligopolist market. There may be three or five firms. It is also
known as competition among the few. With only a few firms in the
market the action of one firm is likely to affect the others. An
oligopoly industry may produce either homogenous or heterogeneous
Monopolistic competition refers to a market
situation where there are many firms selling a differentiated
product. There is competition which is keen, though not perfect,
among many firms making very similar products. No firm can have any
perceptible influence on the price output policies of the other
sellers nor can it be influenced much by their actions. Thus
monopolistic competition refers to competition among a large number
of sellers producing close but not perfect substitutes for each
In pure competition the number of buyers and
sellers is very large. There is a perfect competition among them.
Price is determined for the entire industry by the forces of demand
and supply. All firms have to sell their product at that price. No
firm can influence price by a single action. Thus every firm is a
price taker and a quality adjuster.
Stages of buying decision process: Problem Recognition,
Information search, Evaluation of Alternatives, Purchase
decision, Purchase, Post-Purchase Evaluation......
Business market in simple words is business to business
market where in the products or services of a particular
organization are sold to or purchased by other organization or