Monopoly vs Perfect Competition
What is the difference between monopoly and perfect competition?
Let's examine the significant difference between these two terms, which mark two extremes of market structure:
Perfect competition is a type of market that has many consumers and producers with no barriers to exit or entry into that market. The goods sold are perfectly homogenous (meaning that there is little quality difference between providers) with perfect information and well-defined property rights. No individual in this market can act in such an economic way that the price of a good is affected. Producers in this market choose how much to produce, but do not select the price point at which they sell, making them price takers; because of the homogenous nature of the products, producers cannot raise their product above the market rate and still locate a buyer.
A monopoly is a market in which there is only one producer and many consumers. There is no economic competition and no viable substitute goods, which results in the single producer having complete control over the price point at which their product is sold (the price maker). Buyers in this market are forced to accept rising prices because of the lack of alternatives present.