Monopoly, Oligopoly, and Competition: How Market Structure Affects Prices

Many sellers offer identical products, and none can influence the price. This is a theoretical benchmark; some agricultural commodity markets come close.

Many firms sell similar but differentiated products, such as restaurants or clothing brands. Firms have some pricing power because of brand and product differences.

A few large firms dominate, as in many telecoms, airlines, and supermarkets. Firms watch each other closely, and prices can be sticky.

A single seller dominates with no close substitutes. Monopolies can charge higher prices and may have less incentive to innovate, which is why competition authorities scrutinise them.

Markets with more competition generally offer consumers more choice and pressure on prices. Supporting competition, switching providers, and comparing options all help markets work better.