Perfect competition, monopolistic competition, oligopoly and monopoly Essay - 1

completed tilt, monopolistic competition, oligopoly and monopoly - Essay ExampleThirdly, an oligopoly comprises of few firms. When these firms merge, they reduce payoff to allow them raise their profits as in the case of a monopoly. In doing so, they produce output that creates incentives for cheating in the case of shrewd agreements, ending up competing with each other. Fourthly, a monopolistic competition entails many firms competing against each other, each producing a slightly different product. This paper will depict the traits of different types of market, their differences, similarities, and economic efficiency of outcomes under staring(a) competition and monopoly.The major traits of perfect competition include prevalence of many small firms, all organizations exchange identical products, free entry and exit to the market, and perfect knowledge regarding the prices and technology in the market. These traits mean that it is non possible for a firm to exercise any form o f control in the market. Since the large fig of firms sell identical products, a broad range of perfect substitutes prevail based on the output of a given organization. As such, the demand curve for the firms in a perfectly competitive market is perfectly elastic (Dransfield, 2013). Since firms be free to enter the market, this means that resources such as capital are perfectly mobile. As such, it is not possible to impose barriers of entry into the market. With regard to the issue of perfect knowledge, it is professedly that organizations operate in a similar environment. As such, consumers are aware of the perfect substitutes prevalent in the market for a certain good, especially since firms produce matching products (Stackelberg, 2010).In a perfect competition market, the industry and market forces determine the prices and output. The price is set by the market forcing firms to adjust their prices based on equilibrium position of firms as shown by the figures below.In the firs t figure, the demand and supply curves interest at point E.