Market
A market is any structure that allows buyers and sellers to exchange goods, services, or information.
The exchange of goods or services, with or without money, is called a transaction.
Competition
Competition is the effort of firms to attract customers and achieve their objectives.
The four main market structures are:
- Perfect Competition
- Monopolistic Competition
- Oligopoly
- Monopoly
Perfect and Imperfect Competition
Perfect Competition
A market with:
- Many buyers and sellers
- Identical products
- Well-informed buyers and sellers
- Free entry and exit
Firms are price takers.
Imperfect Competition
Markets where firms have some control over price because of factors such as product differentiation or a small number of competitors.
Includes:
- Monopolistic Competition
- Oligopoly
- Monopoly
Barriers to Entry
Barriers to entry are factors that make it difficult for new firms to enter a market.
Examples:
- High start-up costs
- Technological requirements
- Patents
- Control over important resources
- Legal restrictions
