Article Analysis

Article Analysis

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 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.

Perfect competition is an economic model that describes a hypothetical market form in which no producer or consumer has the market power to influence prices. The following are the characteristics of a perfectly competitive model. The market has multiple buyers and sellers. Some markets maintain atomicity. An atomistic market is one in which there are a large number of small producers and consumers on a given market, each so small that its actions have no significant impact on others. Other markets contain homogeneity. Homogeneity is when each competitor in the market produces a good that is identical to those produced by the other competitors in the industry. Goods and services are perfect substitutes; that is, there is no product differentiation. Perfect and complete information is when all firms and consumers know the prices set by all firms. Equal access explains that all firms have access to production technologies, and resources (including information) all of which are perfectly mobile. Each competitor in the markets can easily entry and exit a market. Any firm may enter or exit the market as it wishes so there are no barriers to entry. In each market competitors have no control over the price they charge consumer.

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” 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 ...