SMALL MARKET
independent selling many differentiated products.
For example, fish market sells many different type of fish.
Although it have many types but they also consist as fish.
Although it have many types but they also consist as fish.
" WHAT IS THE MARKET STRUCTURE OF A SMALL MARKET ? "
The small market like fish market is
monopolistic competition. It is easily make us
imagine that is perfect competition .
Because not only monopolistic competition, in perfect competition, a small market sells and produces many convenience goods which we need it and it is important in our daily life. Although it is alike as perfect competition but it is not !
The small market is a market
- Why say so ?
Because not only monopolistic competition, in perfect competition, a small market sells and produces many convenience goods which we need it and it is important in our daily life. Although it is alike as perfect competition but it is not !
The small market is a market
which is consist a large number of sellers.
So, for the new firms in market,
they can easily entry and exit in the market,
because involves many sellers in the market.
So, for the new firms in market,
they can easily entry and exit in the market,
because involves many sellers in the market.
 |
| Many !!! |
 |
| Many !!! |
The small market can control the price of the differentiated goods they sell, the price can't be too high or too low, yet it is enough to attract consumers attention. It is because in monopolistic competition, a small market is a price maker.
- So, do small market like fish market continue to be a monopolistic competition in the market or change to perfect competition?
If a small market is monopolistic competition,
it can advertise the differentiated products competitively.
It also can control the price instead of
put the price of the products in higher or lower price.
It bring a huge benefits to consumers not to worry
about when the price will increase or decrease one day !
But if a small market is perfect competition,
it cant control the price because they are no
ability to influence the price of the products in the market.
So, monopolistic competition is suitable to continue to be used for a small market !
[ sources : http://tutor2u.net/economics/content/topics/competition/competition.htm ]
[ Graph : http://tuvaro.com/ws/?q=fairly+elastic+graph++%2Fimages ]
Written by : Sia Shi Min
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