The economics markets comprise both of the buyers and sellers. The buyer purchases the products or services offered by the seller, at the same time seller tries his very best to satisfy the purchaser through his product. When there are dozens of sellers available, and there is less of the government interference, then the market is all about the strict competition. It will be pertinent to mention here that there are mainly two types of competition that exist in the economics market, perfect competition and the imperfect competition.The perfect competition is the situation in the market when the price of the commodity is not in the control of the individual sellers and buyers, and monopoly doesn’t prevail in the market. The other feature of the perfect competition is that the buyers are numerous in numbers. On the other hand, there are three types of the imperfect competition; monopoly, oligopoly and monopolistic competition. Monopoly is the type of imperfect competition in which one seller or producers captivates the majority of the market as near substitute’s products or services aren’t available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many firms have competitors, but each of them offers the slightly different or near substitute product in the market.
What is Monopoly?
Monopoly is the type of imperfect competition that prevails in the economic market when the sellers or producers sell the unique products or services to the buyers. No other firms are offering the near substitute or the substitute services like them. In this type of imperfect competition, one company or firm holds the entire market single-handedly. The monopoly set by the companies can be quite complex and can involve even the top government official in it. Due to the risk in the market, no other firm produces such products even knowing the purchaser’s demand. At the same time, the firm bears the risk and makes collaboration with the government officials or utilizing their high approach. For instance, in monopoly, the company imports raw products from the other countries or produces such products whose production is restricted or have a strong check-and-balance on it. The company having the links with higher-ups produces this unique product when no other company offers services eve nearby substitute to them. The company dominates the market share and enjoys higher profits.
What is Monopolistic Competition?
The monopolistic is the type of imperfect competition in which there are many sellers and producers in the market, which are competitors to each other, but at the same time, each of them offers the slightly different products rather than the perfect substitute to each other. The concept of monopolistic competition was first witnessed by the American economist Edward Chamberlin and the English economist Joan Robinson back in 1930’s. The high street restaurants and markets are the best example of such imperfect competition as each of them runs after the customer with offering the different services and products. The product each of them offers can be slightly different or near substitute, although their main concentration is to grab the similar customer with offering an element of uniqueness. Two of the most prominent salient features of this imperfect competition are that there are large numbers of sellers and each one of them offers differentiated products with having some similarity in them.
Monopoly vs. Monopolistic Competition
- Monopoly is the type of imperfect competition in which one seller or producers captivates the majority of the market as near substitute’s products or services aren’t available to them. Contrary to this, monopolistic competition is the type of imperfect competition in which many firms have competitors, but each of them offers the slightly different or near substitute product in the market.
- In the monopoly, the firm or company offers unique service and products. Contrary to this, in monopolistic competition, near substitutes are offered by each of the sellers.
- In the monopoly, the single seller or producer is present, whereas, in the monopolistic competition, there are dozens of seller or producers.
- In the monopoly market, the control over price is limited as there are no nearby substitute products available in this competition. On the other hand, the monopolistic market there is more control over the prices by the authorities.