Difference between oligopoly and monopolistic competition (2023)

Difference between oligopoly and monopolistic competition (1)The definition of market structure is different for marketing and economists specialists.Marketing experts definedeviceCompetitive strategies as a marketing plan, while the view of the economist's market structure implies observing the overall structure with the objective of interpreting and anticipating consumer behavior.

However, economists look at General Panorama, so they are always looking to evaluate broader trends to understand the factors that motivate consumers to know how this information will affect a large segment of the population.Therefore, according to them, the market structure is basically a way in which markets are organized based on several industry companies.There are four types of market structure, which include monopoly, perfect competition, monopolist and oligopoly competition.Monopoly, as the name implies, it has only one company.The perfect and monopolist competition has many small businesses, while oligopoly consists of fewer companies that are relatively large.

With the objective of a detailed understanding, oligopolical and monopolist competitions were explained in greater depth, along with their main differences.


As already discussed, it represents a structure, which contains a smaller number of relatively larger companies with substantial barriers to other companies.A high level of concentration in the market is observed as shared by some companies.Companies from what they operate in an oligopoly market, do not have much competition.Therefore, they should consider the reaction of their nearby competitors while making any business decision.For example, if Texaco plans to increase its market share, reducing the price of the product, it should take into account the likelihood of its rivalry, such as British oil, reducing its prices as a consequence.

Regarding market strategy, oligopoly market structure companies must make important prices and competition decisions.For example, they need to find out if theydesireCompete with competitors or achieve a common understanding with them;It also includes the decision to change the price or keep it constant.Moreover, it is vital that they decide whether they should be the first to impose a new strategy or wait for competitors' movements.The benefits of IR first or second are known as the first engine and the second advantage of the engine.Competitors have to offer.

Monopolistic competition

On the other hand, in a monopolistic competition, the structure contains a large number of small businesses that can exercise freedom of entry and exit.In this model, each company has several competitors, however, each offers slightly different goods.In this cluster of companies, each one makes independent decisions about the price andGo outTaking into consideration the market in which it operates, a product that sells and the cost of related production.Although there is a greater flow ofknowledgeIn the market, however, it does not represent a perfect market.

(Video) Oligopolies and monopolistic competition | Forms of competition | Microeconomics | Khan Academy

The main feature of this market structure is the ability of its products to differentiate itself in four categories, including marketing differentiation, human capital differentiation, differentiation through distribution andphysicistproduct differentiation.

Like all companies involved in the monopolistic competition offer exclusive products, allow itWe willFor advertising to market your products due to the high level of competition with your rivalries.Advertising helps them introduce the distinct characteristics of their product compared to the rest of the market.

In addition, these companies are considered profit maximizers.This is because their businesses are smaller, allowing them to focus on managing a company.


The monopolistic and oligopolical competition represents an imperfect competition.Following are some of the main differences between these two market structures:

Size and Market Control

The main difference between the two market structures is a relative size and a marketto controlOf these companies based on a series of competitors in a specific market.However, there is no dividing line between these structures, for example, there is no clear definition of how many companies there should be in a market to make a monopolistic or oligopolist market competition.

Domain: an indicator of the structure

There are some cases where it is the domain of some companies that determines the type of structure that has a market.For example, an industry consisting of 4000 companies in relation to it is mainly considered monopolistic competition, while an industry with the same number of companies, of which only 4 are relatively large and dominant, are known as the oligopoly market.The most prominent example of the oligopoly market is the oil industry, in which, despite having a large number of companies, the market is dominated by some important companies.

(Video) Monopoly vs. Oligopoly vs. Competition: Monopolies and Oligopolies Defined, Explained and Compared

Geographical area

Another feature that distinguishes the oligopoly monopolistic competition is a geographical area.It is a factor -chave to identify a market structure.It is possible that a specific industry fits into a oligopoly market category if it is in a small town, and a monopolist competition if it is present in a large city.An example of this can be a retail market.If you buy in a large city, you will have hundreds of thousands of purchase alternatives, including shopping malls, supermarkets, mini -moons and retail chains at the national level level represents a monopolistic competition.

Small cities are relatively less equipped with these points of sale and have only a few stores.It can only have one mall and a small number of stores present in a city center.For the structure, it is called oligopoly.

Barriers to enter

As already discussed, the oligopoly represents high input barriers compared to monopolistic competition, but it is a matter of degree.The key element that can lead to the oligopoly market is a requirement for government authorization, especially under circumstances in circumstances where entry is restricted to only a few companies.On the other hand, it can also be representative of monopolistic competition if a large number of companies can enter a market.

In addition to government authorization, property and initial cost also restrict the entry of companies at different levels, which leads to any of the structures.These barriers continue to change from time to time, transferring monopolistic competition to an oligopoly and vice versa.

In general, each market structure represents its own specific resources and tends to show the variation as time goes on, with the change of geographical area, market size, trends and demands of a particular product.Important for a company and even for a consumer to make their strategic decisions successfully.In both markets, companies assume control, whether controlling the supply of their respective products or services to increase demand or control prices and therefore control what a consumer pays for these products.

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(Video) Difference between Oligopoly Competition and Monopolistic Competition


What is the main difference between a monopoly and monopolistic competition select the correct answer below? ›

A monopoly is the type of imperfect competition where a seller or producer captures the majority of the market share due to the lack of substitutes or competitors. A monopolistic competition is a type of imperfect competition where many sellers try to capture the market share by differentiating their products.

What is the difference between monopolistic competition and oligopoly quizlet? ›

What is the difference between monopolistic competition and oligopoly? In oligopoly, there are only a few firms whereas in monopolistic competition, there are many firms so the potential for collusion no longer exists.

What is the difference between an oligopoly and monopolistic competition which is better for consumers? ›

A monopolistic market may quote high prices. Since there is no other competitor to fear from, the sellers will use their status of dominance and maximize their profits. Oligopoly markets on the other hand, ensure competitive hence fair prices for the consumer.

What is the difference between oligopoly and oligopolistic competition? ›

The situation typically breeds regular partnerships between firms and fosters a spirit of cooperation. An oligopoly is a term used to explain the structure of a specific market, industry, or company. A market is deemed oligopolistic or extremely concentrated when it is shared between a few common companies.

What is a difference between oligopoly and monopolistic competition? ›

An oligopoly refers to a market with only a few sellers. Monopolistic competition refers to situations where there are many sellers, but the products are highly differentiated.

What are the main differences between a monopolistic and an oligopolistic market? ›

A monopoly occurs when a single company that produces a product or service controls the market with no close substitute. In an oligopoly, two or more companies control the market, none of which can keep the others from having significant influence.

What are the similarities and between oligopoly and monopolistically competitive market structure? ›

Both monopolies and oligopolies exhibit imperfect competition. They also have significant market control over given products and services and both are made up of large organizations. Both monopolies and oligopolies are affected by aspects such as an increase in production result in reduced prices of goods and services.

What do monopolistic competition and oligopoly have in common? ›

Answer and Explanation: Both monopoly and oligopoly competition are similar in that they portray imperfect competition and both competitive structures have price control to some extent.

What are two key differences between monopolistic competition and monopoly? ›

Key Differences

A single seller creates a monopoly competition. At the same time, monopolistic competition requires at least two but not many sellers. Due to more players in monopolistic competition, there is competition in sales and prices.

What are 2 differences between oligopoly and perfect competition? ›

Perfect competition is a market structure in which there are large numbers of buyers and sellers of homogenous goods. An oligopoly is a market structure dominated by a few firms, who either sell homogenous goods or differentiated goods.

What is the difference between competition and monopolistic competition? ›

In a monopolistic market, there is only one firm that dictates the price and supply levels of goods and services, and that firm has total market control. In contrast to a monopolistic market, a perfectly competitive market is composed of many firms, where no one firm has market control.

What is monopolistic competition and examples? ›

Monopolistic competition exists between a monopoly and perfect competition, combines elements of each, and includes companies with similar, but not identical, product offerings. Restaurants, hair salons, household items, and clothing are examples of industries with monopolistic competition.

What is oligopoly short answer? ›

An oligopoly is a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies. The number of firms is small enough to give each firm some market power.

What is the key difference between an oligopoly market and a competitive market? ›

One key difference between an oligopoly market and a competitive market is that: a) each firm's profits depend on other firms actions in oligopolistic markets while they do not in competitive markets.

What is oligopoly market short answer? ›

Oligopoly markets are markets dominated by a small number of suppliers. They can be found in all countries and across a broad range of sectors. Some oligopoly markets are competitive, while others are significantly less so, or can at least appear that way.

What is oligopoly competition and examples? ›

Oligopoly arises when a small number of large firms have all or most of the sales in an industry. Examples of oligopoly abound and include the auto industry, cable television, and commercial air travel. Oligopolistic firms are like cats in a bag.

Why oligopolists and monopolistic competitors differentiate their products? ›

Under monopolistic competition, many sellers offer differentiated products—products that differ slightly but serve similar purposes. By making consumers aware of product differences, sellers exert some control over price. In an oligopoly, a few sellers supply a sizable portion of products in the market.

What is the difference between monopolies and oligopolies Brainly? ›

Answer. Answer: Explanation: A monopoly contains a single firm that produces goods with no substitute while an oligopoly market has a small number of relatively large firms that produce similar but slightly varient products.

Which of the following statements is true for both monopolistically competitive and oligopolistic industries? ›

Expert-Verified Answer. Both monopolistically competitive and oligopolistic industries have some degree of control over price.

What is the best example of monopolistic competition? ›

The Fast Food companies like the McDonald's and Burger King which sells burger in the market are the most common type of example of monopolistic competition. The two companies mentioned above sell an almost similar type of products but are not the substitute of each other.

What is the difference between the two types of competition? ›

There are two different types of competition:
  • Intraspecific competition occurs between members of the same species. For example, two male birds of the same species might compete for mates in the same area. ...
  • Interspecific competition occurs between members of different species.
Mar 5, 2021

What's the two main features of monopolistic competition? ›

The characteristics of monopolistic competition include the following: The presence of many companies. Each company produces similar but differentiated products. Companies are not price takers.

What is the main difference between a monopoly and monopolistic competition quizlet? ›

What is the main difference between a monopoly and monopolistic competition? Monopolistic competition is characterized by an industry with many firms, differentiated products and easy entry and exit, while monopoly is a single firm with high barriers to entry.

What are 2 major differences between pure competition and each of the following monopolistic competition oligopoly and monopoly? ›

In pure competition there are many suppliers, while in oligopoly there are few suppliers. In pure competition all suppliers are price takers, and no one has any control over price; while in oligopoly there is a certain control over the market and a tendency to act together.

What are the 3 most important characteristics of an oligopoly? ›

The three most important characteristics of oligopoly are: (1) an industry dominated by a small number of large firms, (2) firms sell either identical or differentiated products, and (3) the industry has significant barriers to entry.

What are 3 differences between perfect competition and monopolistic competition? ›

Other differences between perfect and monopolistic competition include the barriers to entry and exit, the slope of the demand curve, average revenue and marginal revenue, product standardization, and price determination among others.

What are the main characteristics of oligopoly? ›

What are the characteristics of oligopoly in economics? Oligopoly characteristics include high barriers to new entry, price-setting ability, the interdependence of firms, maximized revenues, product differentiation, and non-price competition.

What is a major difference between monopolistic competition and perfect competition quizlet? ›

What is the difference between perfect competition and monopolistic competition? In perfect competition, firms produce identical goods. While monopolistic competition firms produce slightly different goods.

Why is it called monopolistic competition? ›

In essence, monopolistically competitive markets are named as such because, while firms are competing with one another for the same group of customers to some degree, each firm's product is a little bit different from that of all the other firms, and therefore each firm has something akin to a mini-monopoly in the ...

What are 2 examples of monopolistic? ›

1. Grocery stores: Grocery stores exist within a monopolistic market as there are a large number of firms that sell many of the same goods but with distinct branding and marketing. 2. Hotels: Hotels offer a prime example of monopolistic competition.

What company is an example of oligopoly? ›

Automakers. Automobile manufacturing is another example of an oligopoly, with the leading auto manufacturers in the United States being Ford (F), GM, and Stellantis (the new iteration of Chrysler through mergers).

What are the differences between monopoly and monopolistic competition markets? ›

A monopoly is a market structure where the participant is a single seller that dominates the overall market as he is offering a unique product or service. In contrast, monopolistic competition is a competitive market with only a handful of buyers and sellers who provide close substitutes.

How does a monopoly differs from monopolistic competition quizlet? ›

a monopoly has market power while a firm in monopolistic competition does not have any market power. a monopoly can never make a loss but a firm in monopolistic competition can.

What is monopolistic competition short answer? ›

What Is Monopolistic Competition? Monopolistic competition exists when many companies offer competing products or services that are similar, but not perfect, substitutes. The barriers to entry in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect its competitors.

What best explains the difference between monopolistic competition and perfect competition? ›

In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.

What is a major difference between monopolistic competition and perfect competition? ›

In a monopolistic market, there is only one firm that dictates the price and supply levels of goods and services, and that firm has total market control. In contrast to a monopolistic market, a perfectly competitive market is composed of many firms, where no one firm has market control.

What is the major difference between perfect competition and monopolistic competition quizlet? ›

What is the difference between perfect competition and monopolistic competition? In perfect competition, firms produce identical goods. While monopolistic competition firms produce slightly different goods.

What are some examples of oligopolies? ›

Some examples of oligopolies include the car industry, petrol retail, pharmaceutical industry, coffee shop retail, and airlines. In each of these industries, a few large companies dominate.

Which of the following is the best example of an oligopolistic industry? ›

Answer and Explanation: The correct answer is a. The best illustration of an oligopoly is the automobile industry.

Which of the following are characteristics of oligopolistic markets? ›

Four characteristics of an oligopoly industry are:
  • Few sellers. There are just several sellers who control all or most of the sales in the industry.
  • Barriers to entry. It is difficult to enter an oligopoly industry and compete as a small start-up company. ...
  • Interdependence. ...
  • Prevalent advertising.


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