Editing Monopoly (section)

== Market structures ==
{{more citations needed|section|date=October 2021}}
[[Market structure]] is determined by following factors:
* ''[[Barriers to entry]]'': Competition within the market will determine the firm's future profits, and future profits will determine the entry and exit barriers to the market. Estimating entry, exit and profits are decided by three factors: the intensity of competition in short-term prices, the magnitude of [[sunk cost]]s of entry faced by potential entrants, and the magnitude of [[fixed cost]]s faced by incumbents.<ref>{{cite journal |last1=Timothy |first1=Dunne |last2=Shawn D |first2=Klimek |last3=Mark J |first3=Roberts |last4=Daniel Yi |first4=Xu |title=Entry, exit, and the determinants of market structure |journal=The RAND Journal of Economics |date=2013|volume=44 |issue=3 |page=27|doi=10.1111/1756-2171.12027 |url=https://doi.org/10.1111/1756-2171.12027 |access-date=27 April 2022}}</ref>
* ''The number of companies in the market'': If the number of firms in the market increases, the value of firms remaining and entering the market will decrease, leading to a high probability of exit and a reduced likelihood of entry.
* ''Product substitutability'': Product substitution is the phenomenon where customers can choose one over another. This is the main way to distinguish a [[monopolistic competition]] market from a [[perfect competition]] market.

In economics, the idea of monopolies is important in the study of management structures, which directly concerns normative aspects of economic competition, and provides the basis for topics such as [[industrial organization]] and [[regulatory economics|economics of regulation]]. There are four basic types of market structures in traditional economic analysis: [[perfect competition]], [[monopolistic competition]], oligopoly and monopoly. A monopoly is a structure in which a single supplier produces and sells a given product or service. If there is a single seller in a certain market and there are no close substitutes for the product, then the market structure is that of a "pure monopoly". Sometimes, there are many sellers in an industry or there exist many close substitutes for the goods being produced, but nevertheless, companies retain some market power. This is termed "monopolistic competition", whereas in an [[oligopoly]], the companies interact strategically.

In general, the main results from this theory compare the price-fixing methods across market structures, analyze the effect of a certain structure on welfare, and vary technological or demand assumptions in order to assess the consequences for an abstract model of society. Most economic textbooks follow the practice of carefully explaining the "perfect competition" model, mainly because this helps to understand departures from it (the so-called "imperfect competition" models).

The boundaries of what constitutes a market and what does not are relevant distinctions to make in economic analysis. In a general equilibrium context, a [[goods|good]] is a specific concept including geographical and time-related characteristics. Most studies of market structure relax a little their definition of a good, allowing for more flexibility in the identification of substitute goods.