Consider the Indian Railways system and think of an alternative railway network in India. You’ll find that there aren’t any! Indian Railways has a monopoly on rail transit, so it is an example of a non-competitive market. There are many marketplaces where the competition isn’t perfect, just as there are many markets where the competition is perfect.
A perfect market is one with perfect competition, with prices determined only by demand and supply. Various forces, however, intervene in the market and distort it. In truth, there are a number of non-competitive marketplaces in which competition is virtually non-existent. Let’s look at a few examples of these marketplaces, such as monopoly and oligopoly.
Markets of different types
Different sorts of markets exist around the world in various market economies. This is dependent on the industry, sector, and numerous enterprises operating in that industry, sector, or area. It is critical for all market participants to understand the type of market they are currently working in or may participate in the future.
This knowledge is essential for making significant judgments. This is necessary, for example, when determining price and manufacturing decisions. This is also necessary while deciding whether to enter or depart a given market. Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly, and Monopsony are the five basic types of market systems in an economy.
Non-competitive market
Non-competitive markets are of the following types:
- Simple monopoly and commodity market.
- Monopoly firm, monopolistic competition and oligopoly.
Monopoly
A monopolistic market is one in which a service or a product may only be obtained from a single source. This scenario is the distinguishing feature of a particular market. A monopoly scenario is likely to develop when there is no economic competition. A simple monopoly exists when there are no competitors to manufacture the product or service that consumers require. It’s also a necessity that the product or service is unreplaceable or irreplaceable.
Monopoly characteristics
In the subject of classical economics, a simple monopoly has the following characteristics:
- Profit maximisation: This is the fundamental motive for each company’s existence in the market. The company strives to create maximum profits as well as maximum income. The company reaches its highest level of output. It also aims to make the best use of resources and produce items at the highest possible output levels. The production is taking place at the junction of the marginal cost and marginal revenue curves.
- Price setting: Monopoly players with a large market share have the power to set and determine commodity prices. A crucial aspect that aids in price setting is the absence of competitors and replacements. The price modulation is based on the market’s demand and supply characteristics.
- High entry barriers: A monopoly frequently has high entry barriers for other market players. Other payers are frequently unable to earn a profit due to the high level of restrictions. This is another reason why a monopoly will remain in place unless the market is disrupted by innovation or disruption.
Commodities market
A commodities market is a different type of market where products are traded. These are commodities, which are unique things. It is usually a virtual, real-world, or physical market. This market exists to facilitate the exchange of raw materials or primary goods. The purchasing and selling of these raw materials and main products are part of the trading in these markets.
Such markets have exchanges that keep people up to date on current commodity prices. Around the world, there are around fifty major controlling commodities markets. These markets aid in the monitoring of global commodity prices. These markets aid and facilitate commodity trading and investment.
Commodities come in a variety of shapes and sizes. Commodities in the commodities markets are divided into two categories: raw materials and finished goods.
Hard Commodities: Hard commodities are those that must be mined or extracted naturally. Gold, oil, and other commodities are examples.
Soft Commodities: These are products that are typically agricultural or livestock. Wheat, sugar, soybeans, maize, and other grains are examples.
Monopolistic businesses
There is only one manufacturer of a certain item or one provider of a particular service in a pure monopoly market. Another requirement for a monopoly is the lack of a feasible substitute for the specific commodity or service. In these market systems, monopoly players have an advantage and can demand any price for the commodity or service.
Multiple elements, such as government-issued licences, control of resources or ownership of the same, trademarks, copyright or patent, and high entry costs combine to make a player the sole or unique seller in a monopoly market. The implementation of limits is a result of the market’s reaction to these circ*mstances.
Conclusion
Monopolistic, monopoly, oligopoly, and perfect competition are examples of monopolistic behaviour. A monopolistic market is a type of imperfect market in which producers sell products that are differentiated by branding and quality.
They frequently overlook the effect on their own prices. When a large number of sellers try to differentiate themselves, a market structure like this emerges. For economies of scale, in an oligopoly market with a small number of sellers, there are entry barriers such as higher investment and low consumer loyalty. Perfect competition is defined as a market that is idealising.
