10.8: Conclusion

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We have now examined two extreme types of market structure – perfect competition and monopoly. While many sectors of the economy operate in a way that is close to the competitive paradigm, very few are pure monopolies in that they have no close substitute products. Even firms like Microsoft, or De Beers, that supply a huge percentage of the world market for their product would deny that they are monopolies and would argue that they are subject to strong competitive pressures from smaller or 'fringe' producers. As a result we must look upon the monopoly paradigm as a useful way of analyzing markets, rather than being an exact description of the world. Accordingly, our next task is to examine how sectors with a few, several or multiple suppliers act when pursuing the objective of profit maximization. Many different market structures define the real economy, and we will concentrate on a limited number of the more important structures in the next chapter.