Page 104 - F1 - AB Integrated Workbook STUDENT 2018-19

Chapter 7

6.5 Forms of imperfect market

Each of these forms depend on how organisations compete within the market.

Occurs when one company controls all or
nearly all of the market for a particular
product or service with no major
competitors.

Monopoly Often caused by high barriers to entry for
the market, or due to government
legislation.

Suppliers are free to set prices due to lack

of competition.

Occurs when a business has many
different competitors, but each offers a
somewhat differentiated product.

Typically there are no barriers to entering
Monopolistic or leaving the market and there is
competition significant advertising expenditure due to
the large amount of competition.

As products are differentiated, businesses

can charge more or less than their
competitors.

Market is dominated typically by between
two and six different organisations.

If only two firms dominate the market it is
Oligopoly referred to as a duopoly.

It is difficult for new firms to enter the
market and the dominant businesses have
significant influence over the prices of the

goods and services they sell.

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