Final Thoughts

It's time to wrap up this little learning session we have been having. To finish this off I have just a few visual aids to cover the four market structures.

To begin with, a chart covering most quick need to know ideas.

Market Structure	Perfect Competition	Monopolistic	Oligopoly	Monopoly
Number of Firms	Many	Several	Few	Just One
Freedom of Entry	Unrestricted	Unrestricted	Restricted	Restricted or Blocked
Nature of Product	Same	Varied by Service/Product	Similar	Exclusive
Implication for Demand Curve	Flat	Elastic	Inelastic/ Kinked	Very Inelastic
Average Size of  Firms	Small	Small	Large	Industry
Possible Consumer Demand	Unlimited	Demand = Average Revenue	Driven by Competitors	No Choice
Profit Making Possibly	No Economic Profit	Short Run Profit Possible	Dependant on Competitors	Maintained Profit
Government Intervention	None	Between Minor and Nothing	Moderate	Highest Level
A New Example	Buying Lobster at the Dock	Vietnamese Soup House	Automotive Industry	FortisAlberta Electricity Distribution
Relationship Between Firms	Indifferent	Competitive	Competitive/ Cooperative	All Alone

Now for the charts, I'll start it off simple with the perfect competition. There isn't and economic profit above and beyond normal profit and firms operate at peak efficiency.

After perfect competition comes the monopolistic structure. This graph illustrates the concept that monopolistic firms have the ability to make economic profit in the short term but over the long term the change in demand has an adverse affect on profit.

Oligopoly chart I've drawn out is one with a kinked demand curve. This is where if a firm raises prices other firm don't follow and they lose market share. If they lower prices other firms will be forced to follow and everyone will lose profit. In the mean time that it doesn't have a large control over pricing the firm is still earning a economic profit.

To conclude this we have the monopoly chart. Monopoly firms are able to earn a long term profit and usually unless there is government intervention will run at profit maximizing quantity over a quantity preferred by customers. The steeper demand curve shows that a monopoly has more control over pricing.

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