Types of Industries

Manostaxx

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SOURCE: https://healthecon.wikispaces.com/Pharmaceutical+industry+-+Chp.+14

There are many types of industries. The industries are categorized into 4 main divisions: Monopoly, Monopolistic competition, Perfect competition, and Oligopoly.

1. Monopoly = is a board game played by two to eight players. (ha ha… just seeing if you were paying attention)
In economics, a monopoly is when a product or service can only be bought from one supplier. In many places, utilities such as telephone service or cable television are monopolies. A product market characterized by one seller and perfect barrier to entry.
2. Monopolistic competition = is a common market form. Many markets can be considered as monopolistically competitive, often including the markets for restaurants, books, clothing, films and service industries in large cities. A product market characterized by numerous sellers, moderate product differentiation, no barriers to entry, and some imperfections in consumer information.
3. Perfect competition = is an economic model that describes a hypothetical market form in which no producer or consumer has the market power to influence prices. According to the standard economical definition of efficiency (Pareto efficiency), perfect competition would lead to a completely efficient outcome. The analysis of perfectly competitive markets provides the foundation of the theory of supply and demand. A product market characterized by numerous buyers and sellers, a homogeneous product, no barriers to entry, and perfect consumer information.
4. Oligopoly = is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). Some industries which are oligopolies are referred to as the “Big 3” or the “Big 4.” Because there are few participants in this type of market, each oligopolist is aware of the actions of the others. Oligopolistic markets are characterized by interactivity. The decisions of one firm influence, and are influenced by the decisions of other firms. Strategic planning by oligopolists always involves taking into account the likely responses of the other market participants. This causes oligopolistic markets and industries to be at the highest risk for collusion. A product market that is characterized by a few dominant sellers and substantial barriers to entry.
(Source: http://simple.wikipedia.org)
(Source: Santerre, Neun, Health Economics)

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