Monopoly: Mono refers to a single and poly means control. Monopoly is the market situation when there is a single producer exists in the market selling unique product. He has full control on the price and supply of the product. He has no competitor. He sets his own price for the product or service.
Duopoly: It is the type of imperfect market where two sellers dominate the entire market for a product or service.
Oligopoly: A market situation where few producers or sellers or firms exist in the market who dominate the entire industry. The product they offer may be homogeneous or differentiated. They have control over the price and output of the product.
Monopolistic competition: It refers to the market situation where a large number of sellers or firms exist in the market. Each firm produces differentiated product in order to maintain its separate identity. There is stiff competition due to a large of number of producers.
Difference Between Monopoly and Monopolistic Competition
1. Under monopoly there is
only one producer while under monopolistic competition there is a large number
of producers.
2. Under monopoly there is no
difference between firm and industry, the firm itself is an industry. On the
other hand, there are many firms in monopolistic competition which make an
industry.
3. There is no competition in
monopoly market structure. Conversely, there is stiff competition exists in
monopolistic competitive market.
4. There is no product
differentiation in monopoly market. Inversely, there are many producers who
produces different products under monopolistic competitive market. The products
are differentiated by color, size, weight, shape, packing, quality etc.
5. A monopolist can adopt the policy
of price discrimination to charge different prices from different customers for
the same product. Conversely, under monopolistic competition, price
discrimination is not possible due to large number of producers and stiff
competition.
6. There are many barriers
(e.g. legal, economic, technical etc.) on entry of the new firm to the monopoly
industry. While under monopolistic competitive market a firm can enter or leave
the industry at any time.
7. Under monopoly a firm earns
super normal profit. While under monopolistic competition the firms only earn
normal profit.
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