Perfect competition and monopoly power Essay Example | Topics and Well Written Essays - 750 words

Perfect tilt and monopoly power - Essay ExampleThere is natural tendency of the high technology fraternity to win this form to shun contender.3. In perfect competition products available in the foodstuff are of similar character manufactured by firms and that do not provide customers the subverting preference. Buyers are free to buy from the foodstuff and firms are also free to attain or exit without restrictionsIn contrast to this in monopoly there is only one seller and plenty of buyers. The inlet barriers exist that dont allow easy entry in the market for many reasons such as high technology products or legally defend products etc. Monopolists set market price of the product and services irrespective of the buyers reaction. The buyers dont have power to function price.Oligopoly is a situation that lies in between the two extreme models of perfect competition and monopoly. This is a market form in which the industry is dominated by a small numbers of sellers or firms an d the last of one firm influences that of others. This close proximity and influence of each firm on the other in the market or industry practically causes collusion of interest. There is scope of competition in oligopoly likewise but firms often employ restrictive trade practices as formation of cartels to raise product prices. OPEC is the go around example which form cartel to restrict production of crude oil to reduce supply and add price in the world market. When the number of firms is larger there can be fierce competition with relatively high production but low prices that amounts to situation in perfect competition. But genuinely the firms operate under imperfect competition. In order to earn greater profit / revenue and market share firms in oligopoly utilize non-price competition and are supported by sticky -upward demand curve.Oligopsony is another(prenominal) form of market in which number of sellers is comparatively large than the number of buyers. This type of mar ket is often seen in the input market where a small number of firms compete to obtain (buy) factors of production. This is just in contrast with the oligopoly market where firms compete to sell the final product. Market with a hardly a(prenominal) sellers (oligopoly) and a few buyers (oligopsony) is called as a bilateral oligopoly.Perfect Competition is the most competitive market structure in which everybody is a price taker. This type of situation hardly exists. It is so competitive that any individual buyer or seller has a very little impact on the market price. When a company emerges with a high technology products that no one else manufactures they acquire a growing monopolistic property in the market as the Microsoft Corporation did with its application software products that have to be used in every product as desktop computer. Initially there was no substitute product in the market as in a monopoly market but gradually some firms dare enter in to the scene to snatch some m arket share of the near