Competition. Features of competitive relations in conditions of monopolistic competition, pure monopoly, oligopoly (the most important)

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Competition. Features of competitive relations in conditions of monopolistic competition, pure monopoly, oligopoly (the most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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26. Features of competitive relations in conditions of monopolistic competition, pure monopoly, oligopoly

Imperfect competition, unlike free, perfect competition, is limited by the influence of monopolies and the state. There are three models of imperfect competition - monopoly, monopolistic competition, oligopoly.

The first model of imperfect competition is monopoly. She has the following features:

1) sole seller, i.e. one firm or industry is the sole producer of a given product or the sole provider of a service;

2) no close substitutes. A monopoly product is unique in the sense that there are no good or close substitutes. From the point of view of the buyer, this means that he must buy the product from the monopolist or do without it, i.e. there are no acceptable alternatives;

3) dictated price: a pure monopoly dictates prices or exercises significant price control;

4) blocked intro: the entry of competitors into the industry under conditions of pure monopoly is limited by insurmountable barriers (patents, monopoly on sources of raw materials, vehicles, etc.).

Monopoly reduces the level of risk in the process of competition.

The second model of imperfect competition is monopolistic competition. Its distinguishing features:

1) there is a sufficiently large number of firms, which limits the control of each over the price, there is no mutual dependence, and collusion is virtually impossible;

2) the products are characterized by real and imaginary differences and different conditions for their sale;

3) economic rivalry entails both price and non-price competition;

4) entry into the industry is relatively easy. The easy entry and exit of firms tends to earn normal profits in the long run;

5) product type - differentiated.

Monopolistic competition is established where even small enterprises can be efficient, and especially where there are many opportunities for changing the product.

The third model of imperfect competition is oligopoly. Its signs, characteristic features:

1) the presence of several firms (sellers);

2) product type - standardized or differentiated;

3) price control: limited by mutual dependence, significant in collusion;

4) the presence of significant barriers to entry into the industry;

5) non-price competition is very typical (especially in product differentiation).

Oligopoly has become more widespread in industries where large-scale production is more efficient and there are no broad opportunities for differentiation of industry products.

Author: Ilyina V.N.

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