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Market Structure and the Role of Government



This research will begin with the statement that the term ‘market structures’ refers to a particular social organization which operates between buyers and clients in any given market. Others define market structures as models that govern social organization between clients and businesses in a market. Since the four market structures are perfect competition, monopolistic competition, oligopoly and monopoly, the characteristics of these market structures differ. In perfect structure, supply and demand as competitive market forces control prices in the market and output levels of produce rendered by competitive firms. In both perfect and monopolistic competition and structures, there are multiple participants and the commodity of trade is homogenous. Monopolistic competition is an intermediary between the two extremes that characterize monopolistic and competitive markets. Herein, there are several firms each with small proportions of market share and an extent of differentiated products. These competitive firms are also price makers. In a monopoly, the product of trade is one, while in an oligopolistic market structure, a number of firms maintain control over the market share. There are neither competitors in a monopolistic market nor close substitutes for the product. In an oligopoly, there is a tendency to compete on non-pricing criteria which include advertising, gift certificates, packaging, and transportation.