The first and most important thing about a market with imperfect competition is that it exists in reality. The standards for pure and perfect competition are impossible to ever meet.A perfectly competitive market has the following characteristics:1: A very large number of businesses producing the same product.2: All those businesses are about the same size.3: They all have the same cost of production.4: They do not engage in advertizing because customers have perfect knowledge.The idea behind perfect competition, the reason it is supposed to be desireable, is that each business is motivated to reduce its selling price to something ever closer to the cost of production, providing consumers with the lowest possible price. Profit margins are shaved to the absolute minimum needed to keep all the producers functioning.The problem here is that in the real world, producers compete by reducing their cost of production. They innovate with new machines, new production processes, finding more efficient ways to do things, cut down on waste, turn waste into marketable goods, and so on. "Perfect competition" can only get the prices down so far, to the set cost of production, and in order to preserve this "perfect" competition, laws such as America's Antitrust Laws need to act against businesses that work to reduce their cost of production, because that is a deviation from perfect competition, allowing one busniess to actually outcompete others.In an "imperfectly" competitive market, one business may earn larger profits than the others by reducing cost of production, and that is the real competition we should be looking for.
What is the characteristic of monopoly competition?
The four key characteristics of monopoly are: (1) a single firm selling all output in a market, (2) a unique product, (3) restrictions on entry into and exit out of the industry, and more often than not (4) specialized information about production techniques unavailable to other potential producers. These four characteristics mean that a monopoly has extensive (boarding on complete) market control. Monopoly controls the selling side of the market. If anyone seeks to acquire the production sold by the monopoly, then they must buy from the monopoly. This means that the demand curve facing the monopoly is the market demand curve. They are one and the same. The characteristics of monopoly are in direct contrast to those of perfect competition. A perfectly competitive industry has a large number of relatively small firms, each producing identical products. Firms can freely move into and out of the industry and share the same information about prices and production techniques. A monopolized industry, however, tends to fall far short of each perfectly competitive characteristic. There is one firm, not a lot of small firms. There is only one firm in the market because there are no close substitutes, let alone identical products produced by other firms. A monopoly often owes its monopoly status to the fact that other potential producers are prevented from entering the market. No freedom of entry here. Neither is there perfect information. A monopoly firm often has specialized information, such as patents or copyrights, that are not available to other potential producers.
What are the six major characteristics of a pure market economy?
We live in a mixed economy. We have always lived in a mixed economy. The prices of goods and services are determined by competition, supply, and demand. The distribution of these things are also privately held. While at the same time, the government spends on infrastructure, medicare, social security, and other societal needs. These things are government held. We have never had a "free-market."
What are the major features of monopolistic competition compared to pure competition and pure monopoly?
In a perfectly competitive industry producers are price takers. Allocative efficiency occurs at the point where Price = Marginal Cost. At this point producers are operating at the lowest average cost and this captures an efficiency that is passed on to consumers in lower prices - which is intuitive that prices would be lower if there are a lot of firms competing. A monopolistically competitive market is basically the same except all the products being produced are heterogeneous and companies don't compete on price as much as trying to differentiate their product (although the actual differences may be negligible). On the other hand, the producer can affect the price (assumption in perfect competition is that no producer/consumer affects market price of goods). For example....cell phones: cell phones all basically serve the same function, but companies try to differentiate themselves by making their phones "special" - like the Razr or the Chocolate. Neither phone does something earth shattering and yet people crave them. Meanwhile, producers can limit the supply (production and number of products distributed in areas) and therefore can set the price high. When the Pink Razr was released it cost about $100 more than you can buy it at a store today. This is mainly because they lost their competitive advantage b/c it's easy for competitors to develop substitutes. A unique looking phone isn't a sustainable competitive advanantage - so the lower the price and accept the lower profit margin until the next big thing. Since monopolistic competition - like the cell phone market - are based on creating differentiated products (in the mind of consumers) it drives advertising - which phones do you see on T.V? How much were they six months ago versus today? Are those phones REALLY THAT DIFFERENT? Nope! = monopolistic competition.
The following are characteristics in monopolistic market.The manufacturer who maintain lead in maintaining latest technology standards in product quality always ahead in product development ahead competitors if any.There is no competitor for that particular product.He should be pioneer in that product in market sale and with brand popularity.The manufacturer who commands high price in market segment.The entrepreneur who commends 60 percent market sale of that particular product .The product developer who maintains high quality standards for their Brand with international STANDARDS like BS , BIS , American with ISO 9000 ahead of their nearest competitors if any.Good brand with highest product service.The entrepreneur who keeps quality and delivery schedule .The Manufacturer who commands highest price for that product in that product segment.Always maintaining product development with eye on competitor with analysing their SWOT ( STRENGTHS , WEAKNESS, OPPORTUNITIES , THREATS ) to command as market leader of that product.
Public goods are characterized by:Non Excludability: This means that you cannot stop anyone from accessing a public good through any mechanism. Now a common restricted definition of excludability that is often found is, “you get it only if you pay for it”. But the important thing to note here is, that the price (payment) mechanism is only one way in which you can exclude people access to a good. Another example of such a mechanism is perhaps you have your own goons who beat up anyone who tries to access a good (say a piece of land). But access to public goods due to their very nature, cannot be denied to anyone. A good example of non excludable good, is the atmosphere. You cannot exclude anyone from breathing right?Non-rivalry: This means that your consumption of the good, which is public, won't in any way affect the consumption of someone else. For example, the sun. If you are getting vitamin Deficiency from sunlight, that doesn't mean that anyone else will get less vitamin D when exposed to sunlight.Hence, any good with these two properties can be classified as a public good. But in reality, examples of public good are hard to find. Some common examples are roads, parks, forests etc. But if you thank about it, for most of these goods, you can actually exclude people with varying degrees. For example, the toll plazas are nothing but a exclusion mechanism. If you don't pay the toll you can't use the road right? Hence most goods are “public” in nature, upto varying degrees.
Following are features of Perfect Competition -1. The sellers are the price takers- Since there are a large number of sellers in the market, no single supplier can influence the market price. This is because supply of each seller is just a negligible fraction of total supply.2. A large number of buyers- There are a large number of buyers in this form of market and hence even the buyers are price takers. The demand of each buyer is a negligible portion of total market demand.3. Homogeneous Product- The product of every supplier is identical in every aspect. They are exactly same in shape, size, color, weight, quality etc.4. Free entry and exit- There are no barriers to entry and exit in the market. Any firm can enter or exit the market any time it wants5. Single Price - All units of the product have a uniform price which is determined by the market.6. All factors of production are perfectly mobile- Under perfect competition, all the factors of production enjoy complete freedom of movement. Thus, all four factors can be moved from one place to another freely.7. Perfect knowledge- All the buyers and sellers have perfect knowledge of the market. Hence, no buyer will end up paying a higher price.8. The absence of transportation cost- It is assumed that there is an absence of transportation cost and hence there will be no difference in transportation cost between the sellers.9. No Interference of government - There is no interference of the government in the market.For more detailed information refer -Forms of Market - Perfect Competition
Monopolistic competition is an oxymoron. There is no competition in a monopoly.Pure competition is the rarest and true version of competition. It means everybody has equal access, equal costs, equal regulations, and equal technology. That doesn't really exist.
List the five characteristics of each of the four basic market models?
Perfect Competetion: 1. Many buyers 2. Many sellers 3. Perfect knowledge among buyers and sellers. 4. No single buyer or no single seller has any significant share in the market demand or supply 5. Free entry / exit of new/ existing buyers and sellers in to / from the market. II Monopoly 1. Many buyers 2. A single seller 3. Perfect knowledge among buyers and sellers. 4. Entry barrier for new producer/ seller 5. The monopolist seller can either choose the price and accept the quantity he can sell or choose what quantity to produce and sell and accept the price that the market can bear. III Oligopoly 1. A few sellors 2. Many buyers 3. Some sellers are price leaders, other producers/ sellers are price followers. 4.Barriers to entry of new competing producers/ sellers. 5. Competetion for retaining market shares, alternative response functions, possibilities of cartel formation and collusion amonh few sellers. IV. Bilatreal Monopoly: 1. Single buyer 2. Single seller 3. Entry barrier for new buyers and new sellers 4. Collective Bargaining 5. Possibility of indetermancy in equilibrium solution.