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Industries traditionally are divided into four categories according to the degree of competition that exists between the firms within the industry.
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Industries traditionally are divided into four categories according to the degree of competition that exists between the firms within the industry. 'These categories are known as market structures will determine a firm's behaviour (or 'conduct'), while the behaviour (or 'conduct') in turn affects the firm's performance: it's profit, efficiency, etc.' (P120, Sloman, 2001) Perfect competition and monopoly are the two extreme of industries. In this essay, the implications for economic welfare of a market structure changing from perfect competition to a monopoly charging a single price will be analysed, moreover monopoly practiced price discrimination will also be evaluated. Perfect competition is 'when all firms regard themselves as price-takers- i.e., they can sell all they wish at the going market price, and nothing at any higher price.' (P154, Lipsey & Harbury 1992) In this situation, suppliers own an insignificant share of market, each firm is too small to affect price via...
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