Summary of Pure Competition

There are four major types of markets. They are: Pure Competition: Large number of buyers and sellers trading a standardized product (corn, wheat); Pure Monopoly: One seller, firm is the industry; Monopolistic Competition: Large number of buyers, large number of sellers each selling a similar but slightly differentiated product (cigarettes); Oligopoly: Very few sellers that acknowledge that decision of one firm affects the others and takes this fact into account when making production or pricing …showed first 75 words of 1383 total…

…showed last 75 words of 1383 total…can be consumed by everybody (public goods). In some industries the minimum point of the ATC curve of a firm can only be reached at a high level of production. In such industries only a few firms can be supported (utilities etc.). One of the assumptions of competition is that products are standardized. But consumers may value differentiation in products. Hence the P = MC decision may not reflect the benefit to society from product differentiation.