Pure Competition There are many industries. Economist group them into four market models: 1) pure competition which involves a very large number of firms producing a standardized producer. New firms may enter very easily. 2) Pure monopoly is a market structure in which one firm is the sole seller a product or service like a local electric company. Entry of additional firms is blocked so that one firm is the industry. 3) Monopolistic competition is characterized by a …
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showed last 75 words of 573 total
…industry may preclude the larger scale production needed for individual firms to achieve economies of scale and therefore obtain the lowest possible per-unit production costs. Pure competition may not motivate the development of new and improved production techniques and new and improved products. The product standardization associated with pure competition limits product variations, which provide consumers with a wide range of choice. Economists have recognized four possible deterrents to allocate efficiency in a competitive economy.