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There are four distinct markets structures in the American economy. These four markets are, pure competition, pure monopoly, monopolistic competition, and oligopoly. These four market models differ as to the number of firms in the industry, whether those firms produce standardized products, or try to differentiate their products from those of other firms, and how easy or difficult it is for firms to enter the industry.First, pure competition market involves a very large number of firms producing a product. In this kind of market new firms can enter the industry very easily. There is non-price competition and no price control. Although pure competition is rare in practice, it is the standard against which the efficiency of the economy and other markets models can be compared. The demand schedule faced by the individual firm is a pure competitive firm is perfectly elastic. In the long run, pure competition produces almost conditions for economic efficiency. In addition, pure competition produces products in the least costly way, and thus it is productively efficient. Pure competition also allocates resources firms, so that they produce the products most wanted by society. Pure competition provides consumers with the larg
Monopolistic competition suggests a considerable amount of competition mixed with small monopoly power. However, important industries such as those providing utilities like electricity, cable television, or local telephone services are close to being pure monopolies, and they play a very important role in the allocation of resources and the production of goods and services in the economy. The pure monopolist is a "price maker"; which means the firm exercises considerable control over price because it is responsible for it, so it controls the total quantity. The consumer who does not buy the product from the monopolist has no alternative, but to without it. Some examples of a pure competition industry of a pure competition industry are agriculture produce, and foreign exchange. However, a purely competitive economy might not provide a sufficient range of product choice for consumers because pure competition is characterized by product standardization and do not promote a wide range of types, styles and products which would allow the consumers to fulfill their preferences. Oligopoly often leads to overt or covert collusion among the firms to fix prices or to coordinate pricing because competition among oligopolies result in low prices and profits, but collusion helps maintain higher prices and profits; and helps creates incentive to cheat among oligopolies. The United States has made a great effort to use government power to enforce competition and prevent emergence of monopoly in industry; so Cartels are considered illegal industries in the United States. Examples of oligopoly firms are OPEC, auto manufacturing, such as General Motors, Ford, Toyota, and firms, such as Coca Cola and Pepsi Cola. Because of the few firms that exist in the United States, oligopolies have considerable control over their prices, but each must consider the possible reaction of rival to its own pricing, output, and advertising decisions. AT&T is another example of oligopoly, because now it is the most powerful in long lines and computer technology. est utility surplus that is consistent with keeping the product price low and in continuing production. Monopolistic competitive firms also use non-price competition in the form of product differentiation and advertising. Finally, oligopoly is a market composed of a few firms that dominate an industry and sell a standardized or differentiated product.
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