ON THE OLIGOPOLY MARKET TYPE

The economic literature discusses four basic market types. These are: pure competition, pure monopoly,, monopolistic competition, and oligopoly. Pure competition is a market type where there exist many sellers. Each seller offers exactly the same product or service output (no product differentiation) and entry into and exit out of the industry is perfectly free and easy. The typical firm is therefore a price taker and will produce a quantity consistent with its profit maximization solution. The impersonal market forces insure a long-run equilubrium situation where each firm produces at pTice equal to marginal cost and minimum average cost.