Perfect Competition The Market Price Of An Product

Perfect competition describes a marketplace that no one participant can set the market price of an exchangeable product. This is generally considered an ideal, rarely found in markets today. There are some approximations, such as online auctions, such as eBay. Such firms’ demand curves are perfectly elastic. These markets are theorized to have an unlimited number of buyers and sellers. There are likewise no barriers to entry or exit. Monopolistic competition describes a marketplace offering differentiated products, and as such are not perfect substitutes. This is found in restaurants, shoes and other preference-driven goods. Such firms find a high elasticity of demand (in the long run), likely excess profits in the short term, and price†¦show more content†¦All other major carriers followed suit.). Monopoly markets have one provider for a good or service. With no competition to influence demand or supply, the monopolist offers less goods than demanded at prices higher than competitive market forces would dictate. Monopolies are notable for their market power (can raise prices without losing customers). U. S. drug manufacturers are an example of monopolies, as they have exclusive rights to sell goods in the US (even though competition exists in other parts of the world). They have a relatively inelastic demand curve (a 1% increase in price will likely reduce demand by less than 1%). Identify one real-life example of a market structure in your local city and relate your example to each of the characteristics of the market. Our local cable television service was a monopoly, with the provider paying a license fee to the cities for the right to offer cable television. Since there was infrastructure cost in wiring and retransmission, cities were traditionally granting such agreements nationwide. Once satellite television offered an alternative for localities unserved by cable, it was only a matter of time before satellite became a competitor to cable. Once Verizon invested in optic fiber delivery infrastructure, FIOS service became a viable competitor to cable. They now operate as an oligopoly, with price and