Market structures: Competitive markets and monopoly

SECTION 7
Introduction to market structures

This unit will introduce the concept of perfect competition, an ideal model that serves as a benchmark against which real-world market structures are analyzed.

Also known as the model of pure competition, perfect competition results in an efficient allocation of resources.

In the real world, however, unregulated markets (which are central to perfect competition) may fail to create desired outcomes for a number of reasons. Economists refer to these situations as examples of imperfect competition.

In this unit, you will first study the Model of Perfect Competition and then move on to what may be considered the antithesis of perfect competition, the Monopoly Model.

Objectives

Upon successful completion of this and the following unit, you will be able to:

• identify the characteristic differences between various market structures, namely, perfectly competitive markets, non-competitive markets, and imperfectly competitive markets, and discuss differences in their operations; and
• compare and contrast as well as discuss the three main kinds of economic systems.

7.1 Perfect competition

7.2 Non-competitive markets: Monopoly

SECTION 8
Imperfect Competition

Here you will learn about imperfect competition and the two models that fall under it: monopolistic competition and oligopoly. This unit will also touch upon game theory through the Prisoner's Dilemma Model and a discussion of the Nash Equilibrium.

8.1 Imperfect competition

8.2 Review

SECTION 9
Resource Markets

This unit outlines how firms decide how much they will use their resources (which include land, labor, capital, and entrepreneurial ability – all of which are required to produce the final good) and at what price. The demand for resources is derived from the demand for the final goods that are produced with them. For example, if the demand for automobiles (the final good) were to increase, the demand for steel (and any other resource used in the production of the auto) would also increase.

Objectives

Upon successful completion of this unit, you will be able to:

• analyze how the demand and supply technique works for the resource markets.

9.1 Overview of resource markets

9.2 The labor market

9.3 Financial markets

9.4 Land and the market for natural resources