Types of Competition - 1000 Words

Economic theory usually differentiates across the four major types of market structure: monopoly, oligopoly, monopolistic competition, and perfect competition. Although the list of market structures can be virtually unlimited, these four types are considered to be the basis for understanding the principles of market performance in different market conditions. Each of the four types of market structures possesses its benefits and drawbacks. In any of these markets, an entrepreneur can develop a strategy appropriate for conquering a part of the market niche. Although for many entrepreneurs monopoly seems an excellent choice (no competitors and full control over the product and its price), in reality it is monopolistic competition that†¦show more content†¦In perfect competition, no barriers to entry or exit exist, and firms are free to move across their markets. Certainly, perfect competition seems a perfect choice for customers, while monopoly will seem like a perfect choice for entrepreneurs – no competition, full price control, and full control over the product assortment. However, as an entrepreneur, I would rather choose monopolistic competition. My choice is justified by several reasons. Fist of all, monopoly prevents entrepreneurs from entering the market, while monopolistic competition markets are free for entry, and as an entrepreneur I may enter any market I deem appropriate and effective in terms of maximizing my profits. Second, monopoly does give some control over prices and product assortment, but in the current world, customers always seek to diversify the range of products they use. Monopoly does not leave any chance for differentiation, and as an entrepreneur I will always want to have several different products that will be sold to several different groups of consumers. Finally, it is due to the fact that competition drives innovation and gives me sufficient stimuli for growth that I can make my business grow. As such, in conditi ons of monopolistic competition I may have fewer opportunities for maximizing my profits for the sake of full control over prices and assortment, but I am more confident that my business will grow for the account of better customer satisfactionShow MoreRelatedDifferent Types of Competition1112 Words   |  4 PagesPure Competition: Pure competition involves number of companies or firms manufacturing similar or identical goods. In such pure competition the firms have no control over the prices. These companies are often termed as Price Takers. The pricing strategy is no in hands of the company it is determined by market forces. 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