Markets and Types of Goods
When the word “Monopoly” is brought up in normal conversation, most people think about the board game that pits one player against the other, in an attempt to take over the board, and put every one else out of business. This is the fun side of a monopoly, and only one way that economics can work. While monopolies are generally thought of disdainfully in an economic sense, it is the only way that some businesses, utilities especially, can operate. Oligopolies, and competitive markets also play a huge role in how this country is run. While a competitive market is the way that most of our economy works, oligopolies are used in cell phone companies, as one example, and in the way that we get our cable television and Internet as well. Monopolies are present in the way that we get our electricity, as well as some of our other utilities. Each has its own place in the economics of America, and most democratic societies. However, the most important, and most used market in America is the competitive market.
There are a number of important characteristics of a competitive market. Probably the most fundamental aspect of the competitive market is the number of buyers and sellers. The main point of this, as is pointed out by Richards (2014), is “the greater number of buyers and sellers that exist, the less bargaining power buyers and sellers have.” This means that the market, when in “perfect competition,” is completely run by supply and demand, with the individuals on both ends having no control over the pricing. One reason for this is that most products in this system are homogenous, meaning that they are almost the exact same product as one another. This, in turn, means that only the amount of the product available (supply), and the amount that is needed by the buyer (demand), is the way that these products get priced. Any...