Coursework on Types of Market Structures in the Economy (Coursework Sample)

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Types of market structures in the economy.
The major factor that determines whether someone should buy a specific commodity or go for a specific service is the demand and supply factor. This is the behavior of household and firms to interrelate based on the production of goods and services. Firms are charged with a responsibility to supply the market with the necessary commodities that consumers need. The motivate factors to firms is solely to maximize profit. On the other hand, the consumer is driven by the motive to maximize utility or the level of satisfaction he or she gets from consuming a specific goods.
Due to economic constraints firms have to produce their product based on the little resources available. In a free and competitive market, the driving factor to the firms becomes the ability to compete for the few consumers available. Producers are motivated by the fact that they will find the market for their commodities. In this case, the market structure for different goods and services varies depending on several factors. In this study, the focus will be do discuss the various market structures that exist in the economy.
Perfectly competitive market.
This is a type of market which have large number of buyers and sellers, and involve buying and selling homogenous goods at specific price levels. Example of a perfectly competitive market is the sale of of goods such as fruits and vegetables. This market is endowed with the following characteristics:
The presence of many buyers, who therefore cannot control the price of the commodity. I this market, the price is fixed by the market forces of demand and supply. Buyers are therefore said to be price takers. This market has also many sellers, who are not able to dictate the price of the commodity. In this case, the action of one firm will automatically affect the action of the other firms. An example is a case where the firm decides to lower the price of its commodity the buyers will rush to buy its commodity and forces the other seller to lower their prices until the equilibrium price is reached.
This market is also characterized by the homogeneity of goods. In this Case, it becomes difficult or the consumers to distinguish the various. Other characters of this market include the existence of free entry and exist, presence of perfect knowledge, no transportation costs, mobility of factors of production and existence of independence in the decision-making for both the buyers and sellers.it is very rare to find firms operate under this form of market.
Oligopoly market.
This market is characterized by few large producers that. That depend on the many buyers in the market. In this type of market the firms are trading the same product r tat product which serves the same purpose. It is therefore endowed by the following characteristics: there exist independence in the decision making of the firm. In this case, the action of one firm will always influence the action taken by the rest of the firms in the industry. For instance, if a firm decides to introduce a new product in the market, it will drive the others to do the same, especially in the case of, follow the leader oligopoly. In this market, advertisement plays a major role, since a major policy change in one firm has a direct influence on the rest of the firms in the industry. This makes the rest to follow the new policy that one firms makes in order to survive the competition.
Oligopoly competition is also characterized by barriers to entry in the market. This is due to the fact that, the initial capital needed to enter is too huge that it becomes difficult for the new firm to enter. There is also control over the essential and specialized inputs by the existing firms. There is also economic of scale that is enjoyed by the few existing firms. In this market, there is exclusive patent and licenses that is difficult to obtain.
Other major characteristics of this form of market include the rigidity in prices,, lack of unique pattern or behavior associated with the price, non-existence of uniformity in the firms and lastly, the indeterminateness nature of te demand curve. Examples of firms operating under this type of market include, the oil companies and petroleum companies.
Monopoly
This is a market characterized by a single supplier of a good or service. Monopoly markets can be formed for various reasons, which include, firm having complete ownership of a particular resource, government giving a particular firm with monopoly power, presence of patent or copyright, and lastly a monopoly created due to the marge of two or more firms.
This type of market is characterized by
Supper-profit profits in the long run. This is due to the fact that firm restricts the amount of supply in the market and hence charge a higher price. This is likely to exploit the consumers since they do not have a choice of alternative. Therefore, firms operating under this type of market, if it offers essential goods, must be controlled by the government so as to reduce this exploitation.
Monopolistic competition.
This is a form of market where forms produce the same goo...