Four market types, price takers, price searchers

Market types
Perfect competition

• Identical products
• Perfect knowledge about product quality, price and cost
• Large no.of independent firms (small size each relative to market)
• No single buyer or seller is influential to the market price
• No barriers to entry or exit
• Perfectly elastic (horizontal) demand

Monopolistic competition

• Slightly differentiated products
• Large no. of competitors
• Downward sloping demand
  

Oligopoly

• Similar or differentiated products
• Small no of competitors
• Interdependence among competitors
• Significant barriers to entry (e.g. large economies of scale)

Monopoly

• Single seller
• Well-defined product with no good substitutes
• High barriers to entry
  

Price takers:

• Small output compared to the whole market.
• Can sell entire output at market price but nothing at a higher price.
• Face a perfectly elastic (horizontal) demand curve.
  

Price searchers:

• Have some price setting power.
• Can choose to charge higher prices but will sell less. Face a downward sloping demand curve.