The similarity between monopolistically competitive, monopolistic, and perfectly
competitive markets is that they all three are market structures. Monopolistically
competitive and monopolistic markets are similar in that both consist of a company or firm
that is unique and do things differently than other companies and firms however, they are
different in that a monopolistic market will contain a single unique company or firm which
makes up it's entire market whereas in a monopolistically competitive market, it consists of
multiple companies and firms that sell or provide similar goods and services but, utilize
different techniques, procedures, and qualities than the rest of their competition within a
given market. A monopolistically competitive and perfectly competitive market are similar
in that they both consist of companies and firms that sell or provide similar goods and
services however, they are different in that a monopolistically competitive market is a
market where companies and firms have differences from each other that set them apart,
despite having similar goods and services whereas a perfectly competitive market consists
of companies and firms that sell and provide goods and services that are practically the
same. When it comes to a monopolistic market and a perfectly competitive market, they are
almost polar opposites and do not have much in common aside from them being market
structures. A monopolistic example would be Microsoft. Some would say that Microsoft
does have strong competitors that sell similar products however, the company's patents and
technological property still puts it in an untouchable position for technology. An example of
a monopolistically competitive market is the restaurant market. There are various different
kinds of restaurants and they all do things in their own ways yet their purpose is the same
which is to provide meals to their customers. And lastly, an example of a perfectly
competitive market would be agriculture. For the most part, agriculture is the same no
matter what company it is. They use the same kinds of tools and processes within their
market and provide the same results as their competitors. When it comes making purchases,
everyone loves to get a good deal however, market structures play a huge factor in pricing.
In a monopolistic market, if the market is a necessity, the company can easily receive
maximum profit from their consumers because they know that their consumers would rather
pay a hefty price tag than go without the necessity. In a monopolistically competitive
market such as aftermarket rims for cars, prices are going to differ based on how they were
made despite all of them having the same purpose and looking very similar. In a perfectly
competitive market, prices of all competitors will be the almost if not exactly the same. If a
company's competitor in a perfectly competitive market lowers their prices, all of the
customers are going to purchase from the competitor so that they may get a better deal for
the same thing so, prices are highly dependable on competitors compared to the other two
market structures. As consumers, we engage in different types of markets. Most markets are
competitive markets. First, there is a perfect competition market. This market structure has
many buyers and sellers. There are no barriers preventing an individual or firm from
entering this market. The sellers are price takers, which means they will take the prevailing
price in the market. The sellers’ products are standardized. Agriculture is a form of the
perfect competition market. It could be 500,000 bushels of corn sold to a broker, or it could
be 50 ears of corn sold at the neighborhood farmer’s market.
Monopolistic competition market is similar to the perfect competition market. Both of these
markets have a large numbers of firms, and both are relatively easy to enter and exit the
market. The differences are the monopolistic competition can differentiate their products
from their competition. In doing this, the firm or individual can determine its own price.
There are many restaurants wanting to sell customers a meal. Some like McDonald’s offer
value meals on a budget, while other places offer a high-end meal at high-end prices.
Unlike monopolistic and perfect competitions, pure monopolies are not a competitive
market. They have no competition at all. They are the price makers, not the price takers.
Utility services are a prime example. Ameren is only electricity provider in my town. They
are also the only natural gas provider. Either pay their ever-increasing prices or move to
another town, which is also serviced by them as well. As a customer, all I can do is gripe
about the price and pay the bill.
In a perfect competition market, there are many competitors, barriers to entry are very low,
products that are sold are homogeneous and identical, absence of non-price competition.
However, whereas monopolistic competition is dominated by a single seller and the
competition is zero, barriers to entry are also low, sold products can have substitutes, and
non-price competition is also present. In a monopolistic market, there is only one firm that
dictates the price and supply levels of goods and services, and that firm has total market
control. In contrast to a monopolistic market, a perfectly competitive market is composed of
many firms, where no one firm has market control. I would choose Wendy's and Burger
King ,both are fast food chains that target a similar market and offer similar products and
services.due to they are both fast food chain and they offer similar products. Burger Kings
has offer coupons to consumers to help with purchasing from their menu and Wendy's has
coupons as well but not as often as the competition. Many consumers chose to shop where
there are great prices and some chose the quality of the product or service. In a
monopolistic market only one firm dictates the price and supply levels of goods and
services which that firm has total market control. A monopolistic market normally is a
single seller, and buyers do not have a choice of where to purchase their goods and
services. Prices are normally high for goods and services just because the firm has control.
A perfectly competitive market is when all producers and consumers have full and similar
information and no transaction cost. Examples of those type of markets are Agriculture,
Foreign Exchange, and online shopping. A monopolistically competitive market
characterizes an industry in which firms offer products or services that are similar
substitutes. Characteristics of this type of market has many sellers, easy entrance, local
advertising, and differentiated products to name a few. Burger King and Mcdonalds is an
example of a monopolistic competitive market because they both target a similar market
and offer similar products. A monopolistic organization would be Google because they are
a singe company that has total control. A perfectly competitive organization is Coca-Cola
which has a large number of buyers and sellers. A pure monopoly exists when only one
seller is in the market supplying to consumers. Monopolistic markets have barriers to entry,
and are also characterized by the fact that the dominant seller can control the supply and the
price. Monopolistically competitive markets on the other hand have easy entrance to the
market and many sellers. What makes this market different is that the products are similar
but differentiated. A perfectly competitive market essentially is the opposite of a monopoly.
This kind of market has no barriers to entry or exit, many sellers, and equal market
share.True monopolies and perfectly competitive markets are rare, especially with
legislation in the early 1900's to break up large monopolies like on steel and oil. Although
it no longer is, DeBeers used to be an example of a monopoly. The company dominated the
diamond market and controlled about 85% of the diamond supply. They would release a
limited amount of diamonds into the market at a time and controlled price, making
diamonds more valuable with their "rarity." This affects people's purchasing decisions in a
variety of ways. Some may spend more than planned to obtain a higher value and rarer
gem, while some may be completely priced out of their desired product and spend less on a
cheaper version.
A monopolistically competitive market could be grocery stores. While they all sell food,
they may sell different types and quality. While a store like Food 4 Less may focus on
cheaper foods, Whole Foods will sell grass fed meat products, wide ranges of vegan and
gluten free choices, etc. On the other hand though, perfectly competitive market example
could be specific food items. Regular carrots sold at a Whole Foods and Food 4 Less could
be interchangeable.In a monopolistically competitive market we have many producers and
consumers of a given product. Due to the amount of producers in a monopolistic
competitive market we get production differences for each active producer and participant
in the market. These differences are seen most commonly through the basis of brand and
quality. Circling back to last week we also see a highly elastic demand curve in these kinds
markets. In these kinds of markets we can also observe a low barrier to entry so its rather
easy to enter or exit any given industry. The producers have some ability and degree of
control over pricing in a monopolistic competition market. In contrast we have a prefect
competition market which, seems to be more theory than anything we can actually put into
practice. In a perfect competition market firms don't have control over pricing and neither
does the consumer so, pricing is dictated strictly off of supply and demand for a given
product. We also get, in a perfect competition, the homogenization of goods, thus rendering
any kind of branding or differential in products useless. Also in a perfect competition the
average revenue is equal to the marginal revenue whereas in a monopolistic competition the
average revenue is usually greater than the marginal revenue. Monopolistic competition is
different from monopoly because monopolistic competition is characterized by free entry,
whereas monopoly is characterized by barriers to entry. Monopolistic competition is
different from oligopoly because each seller in monopolistic competition is small relative to
the market, whereas each seller can affect the actions of other sellers in an oligopoly. I want
you to be clear on these distinctions, especially between monopoly and monopolistic
competition. I find that students frequently confuse these two market structures because of
the name similarity. Monopolistic competition is similar to different markets in different
ways. When compared to perfect competition where anyone can enter the market freely, in
monopolistic competition companies may do so as well. They are also similar to
monopolies in that both structures produce marginal revenue equals marginal cost which
maximizes profit. Lastly, monopolistic competition is similar to oligopoly in that they both
deal with differentiated goods.a monopoly and a monopolistic competition are similar
sounding, almost to the point where it's easy to confuse one for the other. But a
monopolistic competition is different in that it's many people competing over one
product/idea, whereas in a monopoly only one firm is creating the product. For example,
hotels and taxis are monopolistically competitive, while Luxxotica and their glasses are a
monopoly.
Having many different consumers and producers of a product is something that is pretty
much normal. Brand and quality is important just because you sell the same products
doesn’t mean the brand and quality is not a important factor. Overpricing can also turn
away buyers. Your response was very detailed and gave great insight on the differences.a
major difference between a perfectly competitive firm and a monopolistically competitive
firm is that a monopolistically competitive firm faces a downward-sloping demand curve
and price exceeds marginal cost at equilibrium. A monopolistically competitive firm faces a
downward-sloping demand curve because it has limited monopoly power. Because of this,
price is greater than marginal revenue, and so price also exceeds marginal cost at the profit-
maximizing output level.
Selling similar products is something that a lot of companies do. For example, Burger King
and McDonald’s both sell burgers. In your response your described a the different markets
with great detail. It was very informative and helped me see things a better way.
Certain industries require a large initial capital investment. Firms already in the industry
can, according to some economists, obtain monopoly profits in the long run because no
competitors can raise the large amount of capital needed to enter the industry.An interesting
example would be Formula One teams, it is very difficult to create a team and the amount
of capital required to enter the racing series is large. Although there have been rules in
place to regulate seasonal team costs and budgets, it is still what they call a "rich man's
sport". In fact, in order to drive in F1, you have to have started Kart circuit racing as a
youngling which costs thousands of dollars a season. a cartel is a group of firms that
collude to maximize group profits. A cartel exists when firms in an oligopoly coordinate
their decisions in such a way as to maximize joint profits. This type of collusion allows
firms in a cartel to pursue a pricing policy that meets the collective interest of the cartel
members. a monopolistic competitive market seems closer to reality to what we see here on
a daily basis, state side at least. I would be interested to see how other markets function that
are monopolies. There are a few areas of the country where you do have monopolies but
they don't seem as common place as you might see in some other countries.
