Market structures define the different ways companies are structured within the marketplace. The different market structures are based on the characteristics of a market relative to the buyers and sellers and the relationship between them. Competition is another difference between the markets as is the capability of entering and exiting the market.

Perfect competition is where many firms sell the same product and they have no control over the price of their product/service. They must charge the market price or buyers will buy a lower priced substitute. There are also many buyers of their product. Since there are many buyers and sellers and there is no control over the market price, there is total freedom of entry and exit in this market structure. While there is no true perfect competition, it gives us a point opposite of a monopoly in which to work from. Perfect competition is summed up with six basic assumptions: 1) large number of sellers/producers; 2) larger number of buyers; 3) homogeneous product; 4) free entry into and free exit out of the market; 5) perfect knowledge; and 6) there is easily moving in and out of the industry for buyers and sellers (Amacher & Pate 2013). These six assumptions make these products or services perfect substitutes and the demand curve is perfectly elastic.

Bottled water could be described as close to perfect competition. Bottled water is produced by many companies and they have no control over the price of their product. There are many buyers of their product but if they try to control the price of their product, there are many alternative brands that provide bottled water.

The next market structure is monopolistic competition which can be described as a form of imperfect competition (Wikipedia, 2014). In this market structure, each firm can make decisions about price and output as the products, while similar to other products, has uniqueness about it. That uniqueness may be a specific brand, quality within the product, marketing of the product, etc. This differentiation of the product allows each firm to set their own pricing. There is total freedom to enter or exit this market structure. Restaurants can be classified as monopolistic competition. While restaurants provide the service of preparing food for their customers, each restaurant has their own recipes, name, and atmosphere that can be used to differentiate their brand from another. An example of their uniqueness is two of my favorite restaurant located close to home. Both of these restaurants have a gluten free menu which is very important to me since I have Celiac Disease and having a restaurant that can properly prepare food that I can eat means I will have an enjoyable dining experience. The first restaurant is Wildfire. Their menu consists of steaks, chops and seafood. Since they only have one location in the state and their food is top notch, they have the ability of charging prices that are above the norm. The second restaurant is Biaggi’s Italian Restaurant. Again, because of their menu and atmosphere, they can set their prices. There are other Italian restaurants that have cheaper prices; however, they do not have the atmosphere of Biaggi’s and I am willing to pay the price to know that they can prepare my meal according to my specific needs.

Monopoly is the next market structure. A monopoly is a market structure in which there is only one producer/seller for a product. Monopolies are characterized by a lack of economiccompetitionto produce thegoodorserviceand a lack of viablesubstitute goods (Wikipedia 2014). Another attribute of a monopoly is the difficulty to enter the market due to high costs, governmental regulations, or other impediments. Some monopolies that exist are utility companies and drug companies. Utility com