Forms of Industrial Organization
Introduction
Economists assume that there are a number of different buyers and sellers in the marketplace. This means that we have competition in the market, which allows price to change in response to changes in supply and demand. Furthermore, for almost every product there are substitutes, so if one product becomes too expensive, a buyer can choose a cheaper substitute instead. In a market with many buyers and sellers, both the consumer and the supplier have equal ability to influence price. Depending on competition type, there are four major types of organization.
1. Monopoly
2. Oligopoly
3. Monopolistic Competition
4. Perfect Competition
Decision-making depending on market structures (Monopoly, Oligopoly, Monopolistic Competition and Perfect Competition).
Monopoly
Oligopoly (Nilesh)
An oligopoly is a market dominated by a few large suppliers. This select group of firms has control over the price and, like a monopoly; an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are often nearly identical and, therefore, the companies, which are competing for market share, are interdependent because of market forces. Assume, for example, that an economy needs only 100 widgets. Company X produces 50 widgets and its competitor, Compa ...