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Perfect competition and pure monopoly are useful benchmarks of extreme kinds of market structure.
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Perfect competition and pure monopoly are useful benchmarks of extreme kinds of market structure. Most markets lie somewhere between these two ultimate points. Practically, "in nearly half the 800 major product categories in UK manufacturing 70 per cent of the market is shared by the five largest firms in the industry."(ECONOMICS David begg) Quoting the definitions of the two types of market structure from John Sloman's Book---"Essentials of Economics", perfect competition is where there are very many firms competing. Each firm is relatively small enough to the whole industry so that no single firm can influence the market price by changing its output.. By contrast, monopoly is where there is only one firm in the whole industry and there is zero competition from within the industry. In other words, the firm is the industry. Thus the market demand curve is the firm's demand curve. Though major firms in real world would not...
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