| Perfect competition
- Many small firms
- Firms sell identical products
- All firms are price takers
- Free entry and exit
- Zero profits in long-run equilibrium | Monopolistic Competition
- Many small firms
- Firms sell differentiated products
- Each firm has some power to price
- Free entry and exit
- Zero profits in long-run equilibrium
- Price > MC
- Less output than in perfect competition; firms have excess capacity |
| --- | --- |
| Oligopoly
- Few firms, usually large
- Strategic behaviour among firms
- Firms often sell differentiated products and are price setters
- Often significant entry barriers
- Profits depend on the nature of firm rivalry and on entry barriers
- Price > MC (usually)
- Output usually less than in perfect competition but more than in monopoly | Monopoly
- Single firm faces the entire market demand
- Firm is a price setter
- Profits persist if sufficient entry barriers
- Price > MC
- Less output than in perfect competition |