Briefly outline the differences between the types of market structures.

Expert Answers

An illustration of the letter 'A' in a speech bubbles

There are three major differences between the types of market structures.  They differ in terms of:

Number of sellers.  Perfect competition has a large number of sellers.  Monopolistic competition has many sellers, but not usually as many as perfect competition.  Oligopoly only has a few sellers and a monopoly only has one.

Type of product.  Firms in perfect competition sell homogeneous products than are essentially identical.  Firms in monopolistic competition sell differentiated products that are not all the same (for example, restaurants are in monopolistic competition because they sell different kinds of food and have different atmospheres, among other things).  Oligopolies can sell either homogeneous or differentiated products while a monopoly sells a unique product.

Entry conditions.  Firms can very easily enter or exit a perfectly competitive market.  It is only a little harder to enter a monopolistically competitive market.  It is difficult to enter an oligopoly and impossible for firms to enter a monopoly.

Approved by eNotes Editorial Team
Soaring plane image

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial