ii. Group : D
iii. Module Title : Economics in an International Context iv. Assessment Title : Essay
v. Assignment Title : Differences between oligopoly and monopolistic competition market structures. vi. Tutor name : Hind Francesca
vii. Student ID : 200893206
viii. Date of submission : 15/3/2012
ix. Word Count : 986
Differences Between Oligopoly and Monopolistic Competition Market Structures
Market structure refers to the interconnected characteristics of a market, which include the number of firms, level and forms of competition and extent of product differentiation (Business Dictionary, 2012). Based on these parameters, several market structures are defined and this essay will focus on two of them, namely monopolistic competition and oligopolistic markets, by discussing the differences among them and their impact on the customers.
Oligopolistic market is defined as a market that is dominated by few large firms, and that these firms are mutually dependent, where they have to monitor the actions of other competitors closely and act accordingly in response to that (Ison and Wall, 2007). These firms target bigger markets, at regional, national and even international level. Examples of oligopolistic markets include airline, petroleum and bank industries (Economics Online, 2012). On the other hand, monopolistic competition market refers to a market with large number of firms, each producing slightly different product, i.e. their products are unique in its own right and hence the firms have a certain degree of monopoly power (Ison and Wall, 2007). In general, these firms target a smaller market size, say at a local or regional level (Economics Online, 2012). For example, restaurants, hair saloons and boutiques are all examples under this market structure.
Firms in oligopoly market have a certain degree of control over the price of their products (Ison and Wall, 2007). However, there is...