Question

Give at least two examples of industries in the various market structures. For each one, identify:

Barriers to entry

Product differentiation

Price characteristics

Answer 1

Background Information

Markets of all the goods and services in any economy is not the uniform in terms of characteristics like Barriers to entry, product differentiation, Price Characteristics and other traits. In some markets, there is only one producer (monopoly)while in other .markets there are large number of producers (Perfect Competition).

Besides, There are other barometers also for classyfying markets into various cateogaries like Barriers to entry, Product differentiation and price characteristics.

Here in this discussion, various types of market structures will be defined along with their examples in real world. Following are the various types of market structures based on their Characteristics-

1. Perfect Competition

Perfect competition can be defined as a market in which no individual firm can influence the market on its own.

a. There are no barriers to entry.

b. There are homogeneous Products

C. There is uniform Price

Perfect Competition Although Peret Competition is difficult to find in real world yet the two most closest examples are Farmers markets and Craft markets in the United States.
1. Barriers to entry	There are no barriers to entry in both farmers market and craft markets in the United States.
2. Homogeneous Products	The products in farmers market and craft markets are same to a great extent same.
3. Uniform Price	Price of the same products in farmers market and craft market. are nearly same.

2. Monopolistic Competition

Monopolistic Competition is a blend of competitive market and some elements of monopoly market.

a. There are no barriers to entry.

b. Though each firm has unique product but buyers can differentiate the product in terms of packaging, colour, shape etc.

c. There is absence of uniform price.

The two examples of monopolistic markets are toothpaste market and soap market in the United States.

1. Barriers to entry	Any entrepreneur can enter in the market of toothpaste and soaps.
2. Products	The toothpaste are made of nearly the same constituents yet they differ in terms of colour, shape and packaging. Similar is the case with soaps in the United States.
3. Uniform Price	Price of the products in both toothpaste and soap market are nearly the same.

3. Oligopoly

Oligopoly is a market structure in which there are only few firms in the market or small number of large firms producing bulk of output.

a. Barriers to entry and exit-There are barriers to entry and exit in the market due to huge volume of investment, issue of patent  or any other restrictive reason.

b. Product differentiation-There may be homogeneous products or products with small differences.

c. Prices-Prices are nearly the same. However, producers anticipate the competitors action when changing the price.

The two examples of oligopolies in the United States are Pharmaceutical Companies (Acadia Pharmaceuticals, Accera and few other pharmaceutical companies.) and fast food chain stores( Mc Donald's, Pizza Hut and Burger king).

4. Monopoly

Monopoly is a market in which there is only one producer producing the product.

a. There are barriers to entry due to legal restriction, state monopoly or any other related reason making a barrier for entry..

b. There are no close substitutes of the product.

C. There is uniform Price since there is only one producer.

Google and Microsoft is the best example of monopoly market in the United States.