Pure Competition market (Perfect Competition):

It is a market characterized by a large number of independent sellers of standardized products, free flow of information, and free entry and exit. Each seller is a "price taker" rather than a "price maker". But in real life it does not exist anywhere. What really exits is a near perfect competition. As mentioned before infinite number sellers and buyers, these sellers will be supplying homogeneous products to the consumers. Since there are many sellers, the prices of the commodities or products would be almost fixed and no seller can try and hike them as per his wish. So, the sellers have to follow the strict market rules which exist. The competition existing between the sellers in the perfectly competitive market is totally impersonal and hence, it is the ideal one. The supply of homogeneous product ensures that the products are available for the consumers whenever they wish to buy them and there is no hoarding and illegal practices. Many economists believe that perfect competition is the best market structure to protect the interests of the common consumers. Profit maximization is the main aim of the sellers in a perfectly competitive market. Because of the existence of many sellers, the market share of each seller automatically reduces in a perfectly competitive market. This gives them freedom to enter and exit from the market whenever they wish.

Examples: According to many experts, farming is one of the finest perfect competition examples. In this sector, many farmers produce their products (milk, grains, vegetables, etc.) and sell it to the government at the fixed prices. It is mainly the unbranded products that are the closest example of pure competition. It is not possible for any one supplier to jack up the prices when all others are selling the products at a fixed price. Internet service providers are also considered under this market type by many experts.

Monopolistic competition:
It is a market structure when there are many competitors in the market, but each company produces a similar but different product. It is the most common and also the most realistic type of market. There is a difference in what is known as external features, such as branding of commodity or features such as packaging. There are two characteristics of monopolistic competition, which are exceptionally important. These include independent decision-making and market power. There are no restrictions within one market in any manner, and decision to buy or sell a product is independent and not influenced by any factor which makes price fixation and decision-making highly independent and fair. In

economics, this form of market is the earliest form and has a universal existence. Examples: The first one is of course the example of clothing. Even if we take any specific item of clothing, such as a simple shirt, then we will see that there are several producers and almost the entire world population as consumers. The goods produced, though not congruent, tend to have similarities in them. Among all the examples of monopolistic competition, this one is also universally applicable. Simply put, all the restaurants that serve burgers, or for that matter, any kind of food. There is similarity but no congruence. Another prominent and classic example is stationery manufacturers. They produce the same thing, but there is no congruence. Other examples are books, music, and movies. There is very little barrier to entry for these industries. Therefore, economic theory dictations those firms in a monopolistic competition should earn zero economic profit. On the whole, if you take a look at the goods and services that are required for our survival, all are classic monopolistic completion examples. As mentioned above, the reason is simple, their production is needed and almost the entire world population uses these goods. Such goods and services have been around for several centuries. In fact, as a writer and reader, we too are currently a part of a certain monopolistic competition.

Oligopolistic competition:
Oligopoly, is a common economic system in todays society. The word oligopoly comes from the Greek oligos meaning "little or small and polein meaning to sell. When oligos is used in the plural, it means few. An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers.] Alternatively, oligopolies can see fierce competition because competitors can realize large gains and losses at each other's expense. In such oligopolies, outcomes for consumers can often be favorable. Because there are few sellers, each oligopolist is likely to be aware of the actions of the others. The decisions of one firm influence and are influenced by the decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market participants.When competing, oligopolists prefer non-price competition in order to avoid price wars. A price reduction may achieve strategic benefits, such as gaining market share, or deterring entry, but the danger is that rivals will simply reduce

their prices in response. This leads to little or no gain, but can lead to falling revenues and profits. Hence, a far more beneficial strategy may be to undertake non-price competition. Pricing strategies of oligopolies: Oligopolies may pursue the following pricing strategies, 1. Oligopolists may use predatory pricing to force rivals out of the market. This means keeping price artificially low, and often below the full cost of production. 2. They may also operate a limit-pricing strategy to deter entrants, which is also called entry forestalling price. 3. Oligopolists may collude with rivals and raise price together, but this may attract new entrants. 4. Cost-plus pricing is a straightforward pricing method, where a firm sets a price by calculating average production costs and then adding a fixed mark-up to achieve a desired profit level. Cost-plus pricing is also called rule of thumb pricing. Examples of oligopolistic competition:

Four music companies control 80% of the market - Universal Music Group, Sony Music Entertainment, Warner Music Group and EMI Group Six major book publishers - Random House, Pearson, Hachette, HarperCollins, Simon & Schuster and Holtzbrinck Four breakfast cereal manufacturers - Kellogg, General Mills, Post and Quaker Two major producers in the beer industry - Anheuser-Busch and MillerCoors Two major providers in the healthcare insurance market - Anthem and Kaiser Permanente

Pure monopoly
A monopoly (from Greek monos (alone or single) + polein (to sell)) exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry). Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. The verb "monopolize" refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices. Although monopolies may be big businesses; size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market). A monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service; a monopoly may also have monopsony control of a sector of a market.

Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsony and oligopolies are all situations such that one or a few of the entities have market power and therefore interact with their customers (monopoly), suppliers (monopsony) and the other companies (oligopoly) in ways that leave market interactions distorted. When not coerced legally to do otherwise, monopolies typically maximize their profit by producing fewer goods and selling them at higher prices than would be the case for perfect competition. Monopolies can be established by a government, form naturally, or form by integration. In many jurisdictions, competition laws restrict monopolies. Holding a dominant position or a monopoly of a market is often not illegal in itself, however certain categories of behavior can be considered abusive and therefore incur legal sanctions when a business is dominant. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. The government may also reserve the venture for itself, thus forming a government monopoly. Examples of pure monopoly: There are very rare examples of pure monopoly, but there are examples of some less pure forms of it. In many countries many governments owned or government regulated public utilities (gas, water, electricity)may be monopolies. In some small towns, airline service or train transport may be pure monopolies if they are represented only by one firm in these regions . Also, in some very small areas banks , pharmacies or theaters may be examples of pure monopolies.