Monopolistic Competition and Oligopoly market structures Essay - 2

Monopolistic Competition and Oligopoly market structures - Essay Example In the short run the firms operating in monopolistic market can act as monopolies but in the long run the other firms enter into the market and the gains of differentiation takes the downward sloping curve with competition (Cashel-Cordo, n.d, p. 23). Oligopoly is regarded as the market structure where there are large firms operating in the market with significant barriers to entry. The oligopolists are aware of the conditions prevailing in the market as the market is dominated by only few sellers. The decision undertaken by one firm will influence the other firms operating in the market as well as the market as a whole. The decision or the responses of the market participants should be taken into account in the planning process. The prevailing competition in the market structure can give rise different outcomes. An operating firm in the oligopolistic firm can maximise the profit by operating at the level where marginal revenue is same as marginal costs. The primary differences betwee n the two types of market structures are in terms of relative size and control of the market of each firm on the basis of the number of competitors in the existing market structure. It is difficult to find clear cut evidences that cite the differences between the two market structures. Some industries can posses the characteristics of both oligopoly and monopolistic firm. With decrease in the level of competition the firms tend to behave more likely to that of oligopoly and less likely to that of monopolistic competition.