Labor Markets: Monopoly, Oligopoly, and Monopolistic Competition
Uploaded by gpavlushkin on Dec 08, 2005
In society, the world of business is operated and separated into certain market forms that lay the groundwork for a specific infrastructure which lies within the different economical market systems. Through the view of economics, “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses” (DeUriarte), the main criteria by which one can distinguish between different market forms are based upon several specific categories. Such categories may distinguish the type of market system involved within the criteria depending on the outline structure that leads an individual to answer an economists’ most basic queries; the number and size of producers and consumers in the market, the type of goods and services being traded, and the degree to which information can flow freely. After careful research and understanding of the economical degree of measure, certain, major forms of markets clearly stand out above all; a monopoly, oligopoly, and the monopolistic competition. Each market structure consists of diverse characteristics; a monopoly is defined as a persistent market situation where there is only one provider of a kind of product or service. In contrast, oligopoly is a market form in which a market is dominated by a small number of sellers. Furthermore, the monopolistic competition is a common market form where many markets can be considered as monopolistically competitive, because there are many producers and many consumers in that given market.
Still to this day, monopolies exist in our economy and thus set certain standards that portray the lack of economic competition for the good or service in that particular market. However, several important monopolies are prevalent that justify certain factors discussed, “a pure monopoly which is a market whose sales are completely attributable to a single firm” (DeUriarte 125) and “a natural monopoly which is able to produce at the cheapest cost for society by virtue of its history and experience in the market and therefore is relatively free from any serious threat of entry by new firms” (DeUriarte 125). In a pure monopoly, the telecommunications industry has illustrated the ability to produce high profits and excessive revenue throughout the industry, allowing for the price – setting power to be evident which establish authority standards and procedures that dictate the market. Thus, assuming that the firm aims to maximize profits (where MR=MC), one can establish a short run equilibrium...