Editing Microeconomics (section)

== Market structure ==
{{main|Market structure}}Market structure refers to features of a market, including the number of firms in the market, the distribution of market shares between them, product uniformity across firms, how easy it is for firms to enter and exit the market, and forms of competition in the market.<ref>{{Cite book| publisher = Thomson South-Western| isbn = 978-0-324-28860-5| last = McEachern| first = William A.| title = Economics: A Contemporary Introduction| date = 2006| pages = [https://archive.org/details/economicscontemp0000mcea/page/166 166]| url = https://archive.org/details/economicscontemp0000mcea/page/166}}</ref><ref>{{Cite encyclopedia| publisher = Oxford University Press| isbn = 978-0-19-875943-0| last1 = Hashimzade| first1 = Nigar| last2 = Myles| first2 = Gareth| last3 = Black| first3 = John| title = market structure| encyclopedia = A Dictionary of Economics| date = 2017| url = https://www.oxfordreference.com/view/10.1093/acref/9780198759430.001.0001/acref-9780198759430-e-1937}}</ref> A market structure can have several types of interacting [[market system]]s. 
Different forms of markets are a feature of [[capitalism]] and [[market socialism]], with advocates of [[state socialism]] often criticizing markets and aiming to substitute or replace markets with varying degrees of government-directed [[economic planning]]. 

Competition acts as a regulatory mechanism for market systems, with government providing regulations where the market cannot be expected to regulate itself. Regulations help to mitigate [[Negative Externalities|negative externalities]] of goods and services when the private equilibrium of the market does not match the social equilibrium. One example of this is with regards to [[building codes]], which if absent in a purely competition regulated market system, might result in several horrific injuries or deaths to be required before companies would begin improving structural safety, as consumers may at first not be as concerned or aware of safety issues to begin putting pressure on companies to provide them, and companies would be motivated not to provide proper safety features due to how it would cut into their profits.

The concept of "market type" is different from the concept of "market structure". Nevertheless, there are a variety of [[Market (economics)#Types of markets|types of markets]].

The different market structures produce cost curves<ref>{{Citation|last=Emerson|first=Patrick M.|title=Module 8: Cost Curves|date=2019-10-28|url=https://open.oregonstate.education/intermediatemicroeconomics/chapter/module-8/|work=Intermediate Microeconomics|publisher=Oregon State University|language=en|access-date=2021-05-13}}</ref> based on the type of structure present. The different curves are developed based on the costs of production, specifically the graph contains marginal cost, average total cost, average variable cost, average fixed cost, and marginal revenue, which is sometimes equal to the demand, average revenue, and price in a price-taking firm.

=== Perfect competition ===
{{main|Perfect competition}}

Perfect competition is a situation in which numerous small firms producing identical products compete against each other in a given industry. Perfect competition leads to firms producing the socially optimal output level at the minimum possible cost per unit. Firms in perfect competition are "price takers" (they do not have enough [[market power]] to profitably increase the price of their goods or services). A good example would be that of digital marketplaces, such as [[eBay]], on which many different sellers sell similar products to many different buyers. Consumers in a perfect competitive market have perfect knowledge about the products that are being sold in this market.

=== Imperfect competition ===
{{main|Imperfect competition}}

Imperfect competition is a type of market structure showing some but not all features of competitive markets. In perfect competition, market power is not achievable due to a high level of producers causing high levels of competition. Therefore, prices are brought down to a marginal cost level. In a monopoly, market power is achieved by one firm leading to prices being higher than the marginal cost level. <ref>{{cite book |last1=Goolsbee |first1=Austan |title=Microeconomics |date=2019 |publisher=Macmillan Learning |location=New York |isbn=978-1319325435 |edition=3rd}}</ref> 
Between these two types of markets are firms that are neither perfectly competitive or monopolistic. Firms such as Pepsi and Coke and Sony, Nintendo and Microsoft dominate the cola and video game industry respectively. These firms are in '''imperfect competition''' <ref>{{cite book |last1=Goolsbee |first1=Austan |title=Microeconomics |date=2019 |publisher=Macmillan Learning |location=New York |isbn=978-1319325435 |edition=3rd}}</ref>

=== Monopolistic competition ===
{{main|Monopolistic competition}}

Monopolistic competition is a situation in which many firms with slightly different products compete. Production costs are above what may be achieved by perfectly competitive firms, but society benefits from the [[product differentiation]]. Examples of industries with market structures similar to monopolistic competition include restaurants, cereal, clothing, shoes, and service industries in large cities.

=== Monopoly ===
{{main|Monopoly}}

A monopoly is a market structure in which a market or industry is dominated by a single supplier of a particular good or service. Because monopolies have no competition, they tend to sell goods and services at a higher price and produce below the socially optimal output level. However, not all monopolies are a bad thing, especially in industries where multiple firms would result in more costs than benefits (i.e. [[natural monopoly|natural monopolies]]).<ref>{{Cite news|url=https://www.economicshelp.org/microessays/markets/monopoly/|title=Monopoly - Economics Help|work=Economics Help|access-date=2018-03-14|language=en-GB|url-status=live|archive-url=https://web.archive.org/web/20180314104615/https://www.economicshelp.org/microessays/markets/monopoly/|archive-date=2018-03-14}}</ref><ref>{{Cite web|last=Krylovskiy|first=Nikolay|title=Natural monopolies|url=https://www.economicsonline.co.uk/Business_economics/Natural_monopolies.html|access-date=2020-09-03|website=Economics Online|date=20 January 2020|language=en-US}}</ref>

* Natural monopoly: A monopoly in an industry where one producer can produce output at a lower cost than many small producers.

=== Oligopoly ===
{{main|Oligopoly}}

An oligopoly is a [[market form|market structure]] in which a [[Market (economics)|market]] or [[Industry (economics)|industry]] is dominated by a small number of firms (oligopolists). Oligopolies can create the incentive for firms to engage in [[collusion]] and form [[cartel]]s that reduce competition leading to higher prices for consumers and less overall market output.<ref>{{cite web|url=http://www.ftc.gov/bc/edu/pubs/consumer/general/zgen01.shtm|title=Competition Counts|date=11 June 2013|website=ftstatus=live|archive-url=https://web.archive.org/web/20131204132757/http://www.ftc.gov/bc/edu/pubs/consumer/general/zgen01.shtm|archive-date=4 December 2013}}</ref> Alternatively, oligopolies can be fiercely competitive and engage in flamboyant advertising campaigns.<ref>{{Cite journal |title=Gary M. Erickson (2009). "An Oligopoly Model of Dynamic Advertising Competition". ''European Journal of Operational Research'' 197 (2009): 374–388. |journal=European Journal of Operational Research|year=2009|volume=197|issue=1|pages=374–388|url=https://econpapers.repec.org/article/eeeejores/v_3a197_3ay_3a2009_3ai_3a1_3ap_3a374-388.htm|last1=Erickson|first1=Gary M.|doi=10.1016/j.ejor.2008.06.023}}</ref>

* Duopoly: A special case of an oligopoly, with only two firms. [[Game theory]] can elucidate behavior in duopolies and oligopolies.<ref>
{{Cite web
 |url         = http://www.apeconreview.com/oligopoly.html
 |title       = Oligopoly/Duopoly and Game Theory
 |website     = AP Microeconomics Review
 |date        = 2017
 |access-date = 2017-06-11
 |quote       = Game theory is the main way economists [sic] understands the behavior of firms within this market structure.
 |url-status=live
 |archive-url  = https://web.archive.org/web/20160625002834/http://www.apeconreview.com/oligopoly.html
 |archive-date = 2016-06-25
}}
</ref>

=== Monopsony ===
{{main|Monopsony}}

A monopsony is a market where there is only one buyer and many sellers.

=== Bilateral monopoly ===
{{main|Bilateral monopoly}}

A bilateral monopoly is a market consisting of both a monopoly (a single seller) and a monopsony (a single buyer).

=== Oligopsony ===
{{main|Oligopsony}}

An oligopsony is a market where there are a few buyers and many sellers.