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Presentación Financiera
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Created on February 4, 2024
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Market Structures
Rubén Gutiérrez Rodríguez
Advantages of each market structure
Monopolistic competition
Pure competition
- Variety of products: Firms differentiate their offerings, giving consumers a wider range of choices.
- Lower prices: Due to intense competition, firms are forced to keep prices low to attract customers.
- Small business opportunities: Lower barriers to entry allow new businesses to compete and potentially offer innovative products.
- Easy price comparison: With identical products across firms, comparing prices and finding the best deal is simpler.
Pure monopoly
Oligopoly
- Some product differentiation: Firms may offer distinct products to different segments, providing some variety for consumers.
- Guaranteed product availability: Monopolies are the sole providers, ensuring the product is always available.
- Potential for stable pricing: Oligopolies may cooperate to avoid price wars, leading to more predictable pricing for consumers.
- Potential for innovation: Monopolies may invest in research and development, leading to advancements that benefit consumers.
Disadvantages of each market structure
Monopolistic competition
Pure competition
- Difficult price comparisons: Differentiated products make direct price comparisons challenging.
- Limited product variety: Firms have little incentive to differentiate their products, leading to fewer choices for consumers.
- Higher prices: Firms have some control over pricing due to product differentiation, potentially leading to higher costs.
- Susceptibility to economic downturns: Competitive pressures can make these markets vulnerable to economic fluctuations.
Pure monopoly
Oligopoly
- Limited innovation: Reduced competition can reduce firms' interest in investing in new products or technologies.
- High prices: Monopolies face no competition and can set prices freely.
- No choice for consumers: Consumers have no alternative supplier and are entirely dependent on the monopoly's offerings and prices.
- Limited consumer choice: With only a few dominant brands, consumers may have fewer options compared to more competitive markets.