SAMANIEGO, GLIZETTE B.

BSA-4TH YEAR

1. Define Perfect Completion, Monopoly, Monopolistic Completion and Oligopoly.

ANSWER:

The term "perfect competition" refers to a market structure in which competition is at

its most intense. A theoretical market structure in which the following characteristics are met is
known as pure or perfect competition. Every business sells the same thing (the product is a
"commodity" or "homogeneous"). Every business is a price taker (they cannot influence the
market price of their product). Prices are unaffected by market share. Buyers have
comprehensive or "perfect" information on the goods being sold and the pricing charged by
each firm in the past, present, and future. Both capital and labor are extremely mobile.
Companies can enter and depart the market at no cost. Ideally, perfect competition is a
hypothetical situation which cannot possibly exist in a market. However, perfect competition is
used as a base to compare with other forms of market structure. The benchmark, or "ideal
type," against which real-life market arrangements can be measured is perfect competition.
Perfect competition is the theoretical polar opposite of a monopoly, in which only one firm
supplies a good or service, and that firm can charge whatever price it wants because consumers
have no other options and would-be competitors find it difficult to enter the market. There are
numerous buyers and sellers in perfect competition, and prices reflect supply and demand.
Companies make just enough money to stay afloat, but no more. If they made too much money,
other businesses would enter the market and reduce revenues.

A monopoly is when one corporation holds a dominant position in an industry or sector

to the extent of excluding all other feasible competitors. Monopolies are generally frowned
upon in free-market countries. Due to a lack of other options for consumers, they are perceived
as contributing to price gouging and decreasing quality. They can also concentrate wealth,
power, and influence in the hands of a single person or a small group of people. Governments,
on the other hand, may encourage and even impose monopolies in some critical services, such
as utilities. A monopoly is defined by a lack of competition, which can result in excessive
consumer costs, substandard products and services, and unethical business practices. A
company that controls a market segment or industry can take advantage of its position at the
expense of its customers. It has the ability to generate fake scarcities, set prices, and defy supply
and demand laws. It has the potential to stifle new entries into the market, as well as
experimentation and innovative product development. Because the consumer is unable to
choose a competitor, he or she is at the mercy of the company. When a market is monopolized,
it frequently becomes unfair, unequal, and inefficient.

Monopolistic competition describes an industry in which a large number of companies

sell products or services that are similar but not identical to one another. In a monopolistic
competitive industry, entry and exit barriers are minimal, and one firm's decisions have little
impact on its competitors. Monopolistic competition is intimately linked to the brand
differentiation business strategy. Monopolistic competition is a hybrid of monopoly and perfect
competition (a purely theoretical state) that incorporates aspects of both. In monopolistic
competition, all firms have the same low level of market power; they all set prices. Demand is
very elastic in the long run, meaning it is sensitive to price fluctuations. Economic profit is
positive in the short run, but it approaches zero in the long run. Firms that compete in a
monopolistic market are more likely to advertise excessively. Monopolistic competition is a type
of competition that can be found in a variety of industries that consumers are familiar with.

Oligopoly is a market structure in which only a few enterprises can prevent the others
from exerting considerable influence. The concentration ratio is a measure of the largest
companies' market share. A monopoly is a market with only one producer, whereas a duopoly
has two firms and an oligopoly has three or more. The number of firms in an oligopoly has no
definite upper limit, but it must be small enough that the activities of one firm have a
considerable impact on the others. Steel corporations, oil companies, railways, tire companies,
grocery store chains, and cellular providers have all been oligopolies in the past. An oligopoly,
according to economic and legal concerns, can stifle new entrants, limit innovation, and raise
prices, all of which affect consumers. Instead of collecting prices from the market, firms in an
oligopoly determine pricing, whether collectively (in a cartel) or under the leadership of a single
enterprise. As a result, profit margins are higher than in a more competitive market. Markets
dominated by a small number of suppliers are known as oligopoly markets. They can be found in
every country and in a wide range of industries. Some oligopolistic markets are competitive,
whereas others aren't, or at least appear to be. Concerns about coordinated actions or a lack of
vigorous competition are frequently brought to the attention of competition authorities.
However, detecting the root cause of sub-competitive performance in oligopolies can be
difficult, and the manner in which it occurs (e.g., through an explicit agreement among the firms
to restrain competition, or something less) can have a significant impact on the analysis and
tools/remedies available under competition law. This could result in enforcement gaps, leaving
welfare-reducing behavior unaddressed.