Perfect Competition

The most important characteristic of perfect competition is that there are many different firms involved in the market. This means that no single firm can wield market control over the price of the quantity. An example of this would be apartment complexes. In one single area, you will most likely find many different apartments. Some may be a little more or a little less but they should all be around the same. This is why they use market rent as a tool to determine what rent should be.

In a monopolistic competition, they have similar products but not identical products. AT&T would be a good example of this. There are many of them within an area but if one of them decided to change the prices on their phones, it would be just as easy to go to another store in the area and get one. They are competing with each other but prices should not vary too much.

An oligopoly is a market where a few firms will compete imperfectly (Amacher & Pate. 2013. Ch. 11.4). An example of this is the iPad and Windows tablet. There are just the two competing with each other but with all of the added features that the Windows tablet has, they could raise the price because there could be more of a demand for them and iPad simply cannot offer all of the same features.

A monopoly controls the selling side of the market. The firm will determine the cost and they hold all of the rights to the product. The most important characteristic is that they are the only supplier. When XM and Sirius satellite radio merged, they became a monopoly. If someone were to want satellite radio, they are the only supplier that you can get it from.