Nature of Competition in Business MONOPOLY OLIGOPOLY MONOPOLISTIC COMPETITION PURE COMPETITION

updated 2007 Sept 05
this page is for marketing students of Prof. Richardson
Students needing to understand these terms
 

Pure Competition - low barriers to entry, many choices, no business has dominance

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- many people competiting and nobody has a significant advantage examples small bars and restaurants variety stores, convenience stores nail salons, barbers small grocery stores doughnut shops professional services (dentist, doctor, architects)

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Oligopoly - very similar products, few sellers, small firms follow lead of big firms, fairly inelastic demand

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- many barriers to establishing a business so only the oldest and biggest businesses are operating examples - all the businesses are big and of equal size banking industry automotive manufacturers gasoline retail companies insurance companies telecommunications companies

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Monopoly - one single large seller with no close competition and no alternate substitutes examples

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- the definition of a Monopoly, some say, is that it is bigger than all other competition combined software companies like Microsoft local telephone in Canada (Bell) Hydro services LCBO Canada Post

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Monopolistic Competition - sellers feel they do have some competition

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- there is one big company dominating the market with a few medium or smaller sized companies examples Google (there used to be "pure competition" until Google grew very big and became dominant) Walmart

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