ECON 3 DefinitionsWatch
- Monopoly can be defined as a market structure which is dominated by a single seller of a product. It has barriers to entry, meaning no other firm can enter the market. A monopoly is a price maker.
- Oligopoly can be defined as a market structure where a few large firms have the majority of the market share. The market strength of firms in oligopolies can be measured by its concentration ratio. Firms in these markets are interdependent.
- Perfect competition can be defined as an extreme form of competition where there are no barriers to entry, the firms are price takers, the products are homogenous and there is perfect knowledge of the product and prices by consumers and producers.
- Contestable markets can be defined as markets which have no barriers to entry and no sunk costs. There are usually few firms in these markets, and the threat of new entrants causes the incumbents to act in a competitive manner.
As long as you define the structure and processes within these types of market, the definition should be sufficient.