What’s in This Chapter?
Monopolistically competitive industries and oligopoly industries are common market structures. This unit gives examples of each market structure, and explains that in most of these industries, there is a significant amount of competition. In each industry structure, it is unlikely that a firm will charge exorbitant prices and make excessive profits in the long run. Even in oligopoly industries, there is a significant degree of actual and potential competition (unless the companies collude).
Game theory is a relatively new branch of economics, which sheds light on firms’ behavior under various competitive circumstances. It has useful applications, especially in oligopoly markets.