| Market Structure |
Characteristics
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| Number of Sellers | Number of Buyers | Barriers to Entry | Entry and Exit Activity | Homogeneous or Differentiated Product? | |
| Pure Competition | Many firms | Many buyers | None | Yes, firms have the freedom to enter and exit | Homogeneous product, all goods are perfect substitutes for consumers |
| Monopolistic Competition | Many firms with non-interdependent pricing and quantity decisions | Many buyers | Very low | Yes, firms have the freedom to enter and exit | Differentiated products, but close substitutes for consumers so their demand curves are elastic |
| Oligopoly | Few firms with interdependent pricing and quantity decision | Unspecified | High | Difficult entry (often due to economies of scale) | Products can be either differentiated or non-differentiated |
| Pure Monopoly | Single seller | Unspecified | Complete | entry blocked | A single, homogeneous product with no close substitutes |
| Market Structure |
Characteristics
|
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|
Short Run |
Long Run Profits?
|
Price Taker or Price Searcher?
|
Draw the demand curve facing the firm
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| Pure Competition | Available | No | Price Taker - the firm chooses quantity but takes price from the market | Perfectly elastic | |
| Monopolistic Competition | Available | No | Price Searcher | Very elastic, but not perfectly elastic because close substitutes exist | |
| Oligopoly | Available | Available if entry is blocked and the colluding cartel holds together (This is unlikely because cartels tend to fall apart.) | Price Searcher | Inelastic, to be an effective oligopoly | |
| Pure Monopoly | Available | Available | Price Searcher | Inelastic, to be an effective monopoly | |
