SL Characteristics Perfect Competition Monopoly Monopolistic Oligopoly

Competition
01 Number of Sellers Many firms Single seller Many firms with Few firms with
non-interdependent interdependent pricing and
pricing and quantity quantity decision
decisions
02 Number of Buyers Many buyers Unspecified Many buyers Unspecified

03 Barriers to Entry None Complete Very low High

04 Entry and Exit Yes, firms have the entry blocked Yes, firms have the Difficult entry (often due to
Activity freedom to enter and freedom to enter economies of scale)
exit and exit
05 Homogeneous or Homogeneous product, A single, Differentiated Products can be either
Differentiated all goods are perfect homogeneous products, but close differentiated or non-
Product substitutes for product with no substitutes for differentiated
consumers close substitutes consumers so their
demand curves are
elastic
06 Short Run Profits? Available Available Available Available
07 Long Run Profits? No Available No Available if entry is blocked
and the colluding cartel holds
together (This is unlikely
because cartels tend to fall
apart.)
08 Price Taker or Price Price Taker - the firm Price Searcher Price Searcher Price Searcher
Searcher? chooses quantity but
takes price from the
market
09 Draw the demand Perfectly elastic Inelastic, to be an Very elastic, but not Inelastic, to be an effective
curve facing the effective perfectly elastic oligopoly
firm monopoly because close
substitutes exist