Russell M. answered • 07/29/23
Experienced AP Social Studies teacher.
There is no accurate answer for perfect competition as it is a theoretical structure. The closest approximation would be agricultural goods such as corn. Since corn from one grower is, in almost every way, indistinguishable from another grower's corn, they exist in perfect competition. This also assumes that there are MANY growers of corn and that no one grower (or firm) controls the market. If any individual grower attempts to increase profit by raising prices, buyers will simply buy from one of the many other growers and the "greedy" grower will be forced to lower his prices again to match the market.
In monopolistic competition, you will see a market with many firms producing nearly interchangeable goods in a way that is similar to perfect competition. The difference comes from producers being able to differentiate their product in a way that attracts consumers to one producer over another. For instance, a white t-shirt with a logo on the front is an extremely simple an inexpensive item to manufacture. There is not discernable difference between a high quality shirt with a logo and one without a logo. Despite this, under monopolistic competition, a company like SUPREME can sell plain white t-shirt with a red logo for over $100. This is because the logo distinguishes the SUPREME shirt from other shirts and creates a "trend", thereby increasing demand for the product and allowing one company to create more profits than another.
In oligopoly, a handful (2-5ish) of companies control an entire industry. One example of this would be the automobile companies in the United States where there are relatively few companies who dominate the industry. Because of barriers to entry, such as start-up costs, new companies are rarely successful and existing companies have merged or been purchased to create conglomerates where one corporation owns multiple automobile "brands". The result is a handful of companies who will typically "compete" with each other without threatening the existence of any of the major companies.
Monopoly is a single company that controls an entire industry. The easiest way to see this is with "natural" monopolies such as municipal water supply. It does not make sense to have multiple companies trying to deliver water to customers in a residential area so one company (usually a government entity in this example) controls the entire industry. This can be extremely problematic even in natural monopolies because if there is misbehavior on the part of the company, consumers have no other options to change to.
