Describe the Four Types of Market Structure

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Describethe Four Types of Market Structure

Amarket structure is defined as the nature and level of competition ofproducts and services. The four types of market structures include:monopoly, oligopoly, monopolistic competition and market competition(Dunne,Klimek &ampRoberts et al., 2013).

FourTypes of Market Structure

  1. Monopolistic competition consists of many manufacturers producing or selling a wide range of products or services in the market. These differ significantly from one another. This is the best market for customers because they are able to choose from a wide variety of Goods and services to meet their needs. Here, buyers tend to look for differences in products and services. An example of a company in a monopolistic competition market is the restaurant industry.

  2. Perfect competition is a market structure consisting of many small companies that offer identical products and compete against each other. In this market, price is the determining factor for sale of goods. An example of a company in a perfect competition market includes sale of tomatoes produced from a particular region.

  3. An oligopoly market consists of few companies in a particular market that sell similar products. An oligopoly market allows consumer to substitute products but these goods are similar to what the other company offers. Examples of oligopoly companies include Chrysler, GM and Ford.

  4. A monopoly market consists of only one manufacturer of particular goods and services and it is the best market for producers. A monopoly market provides producers with a high competitive advantage since only one producer producing a particular product or service is available in the market place. However, a monopoly market is not beneficial to consumers because they cannot substitute a product or service. Here, customers will tend to look for prices differences. Examples of monopoly companies include electric companies or water companies (Dunne, Kilmek &amp Roberts et al., 2013).


Fromthe above discussion, it can be concluded that monopolisticcompetition is the best market for consumers because it provides themwith a wide variety of products to choose from. The monopoly marketis the best for producers because it dominates the market place thusprovides them with a competitive advantage over other companies inthe market.


Dunne,T., Klimek, S. D., Roberts, M. J., &amp Xu, D. Y. (2013). Entry,exit, and the determinants of market structure. TheRAND Journal of Economics,44(3),462-487.

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