There are so many companies competing in the monopolistic competition market, so companies produce different goods easily as they can transfer each other. The production of differentiated goods is one of the most important characteristics of the monopolistic competition market. The pricing policy of many companies, such as those in the market, cannot be dependent on other companies because each company has a very small market share.
The differentiated goods differ in such things as: brand, packaging, sales point, customer service, sale and advertising by installments. Important the fact that the goods are preferable, and it is easily irreplaceable for goods of the seller in the opinion of the buyer. For example, though today in the market there is many psychiatrists, the fees of those who enjoy popularity among them, above, then others. To give one more example, there is a set of the shops trading shoes. Footwear in these shops – the different prices. Because the quality of footwear in the opinion of the buyer varies from shop to shop. For example, the footwear sold in regular shoe shop in any country in the opinion of consumers not same, as in shops of elite, such as Zara, Beymen and Vakko. The same two goods can sometimes be different in the opinion of the buyer because of friendly and polite style of the seller.
In the monopolistic competitive market, for the company, it is easy to enter the market or to leave the market. Because of the differentiated goods in the market of a monopolistic competition each firm has partial monopoly, and for this reason the demand curve on products for each firm will be found. A supply curve for the market out of the question as each firm will establish the own price for profit maximization.The market of an oligopoly is a type of the market where there aren’t enough sellers, but many buyers. In the market of oligopoly usually there are three, five or eight huge firms. In addition to huge firms sometimes there are small firms. In today’s market few large companies. There are three or five major companies dominating in the market of copper, aluminum, iron and steel, cars, tractors, trucks, the automotive and petrochemical.
The market of an oligopoly difficult for the new companies for entering to the market because of some reasons. Some of them are like the production equity, absolute cost benefits or the big equity which exceeds financial opportunities of new firms which want to enter the market.
In the market of an oligopoly the price for all companies are similar. If goods of firms different from each other; it is called “differentiated oligopoly”. Differentiated oligopolies examples, such as automobile, machine and construction materials. In addition to such factors as advertising, policy of sales, trademark, etc.
The companies of an oligopoly watch closely behavior of each other. If one of the companies tries to increase product quantity, goods quality, the number of sales and price policy which will be applied, other companies also will influence from these companies as in the market of an oligopoly a small number of firms is necessary, and each company is important., each firm watch closely what is done by other firms and to take reaction of other firms into account.
Usually in the market of an oligopoly there is no price competition. Each firm wants to support the same price. But, despite of a price competition, firms choose the competition by means of advertising in common sense. As they can be seen in television advertising, they enter tender, changing a form, appearance and packaging of the same goods. They do not mention names of other competitors and the product characteristic, but claims that their products exceed others.The monopoly market is the market where only one firm is found, and only one firm supplies the existing good and the firm can determine the price as desired. There is no other supplier in the market than this company. In this market other goods which will fill the place cannot be easily found. The best examples of monopoly are the entities electricity, water and gas supply.
I told that the place where the monopoly firm sells goods, cannot easily fill up, but we can partially and decide this situation by two methods. For example, though there is no product which can be replaced easily instead of the electricity used for lighting there are various products, such as tree, coal, fuel oil and natural gas which can be replaced with the electricity used for heating. The electricity used for education is an absolute monopoly, and the electricity used for heating is partial monopoly.
The monopoly market has a few barriers to entry. One of them is that there is only one company in the monopoly market and there is no other option that can replace the raw materials used by the firm. the other is that the right to use the new inventions is granted only to the company that has found the invention for a certain period. In short, a patent right. The last is the granting of a production permit to a single company by the state. For example, telephone, electricity, gas and water.In the perfect competitive market is many buyers and sellers who have no right to influence the price alone. Firms cannot establish the prices independently. The price for each company is already established, and the companies accept it. In the market many sellers and buyers who want to produce and buy the same goods. Because of many producers and sellers in the market the production volume and sales of each of them is not important for total sales of goods in the market. As a result, when the firm increases or reduces sales volume, or even when it is reduced to zero, there are no big changes in the goods price. Each firm agree to market price as it is. The same for buyers. Also, there is a lot of buyers. Respectively, the decision on purchase of any of these objects will not affect the goods price.
In the perfect competitive market buyers and sellers can freely enter and exit the market. When it is necessary, firms can pass from one place into another, from one industry to another.
The goods must be the same in every way for the perfect competition market to be established. Although there are many organizations which make special goods or service in the homogeneous market, there is no objective or subjective difference between each unit (bread, laundry detergent, etc.). For example, various packaging’s, different labels prevent this condition. Buyers can want to pay higher price for the better, better packed or differing from each other goods, assuming a difference in quality. Thus, there are more than one price. For example, as well as in case of laundry detergent for linen if two brands which are completely identical in chemistry are various in the opinion of the consumer, we cannot speak about uniformity. Therefore, advertising in the perfect competitive market, it is impossible.