Market Structure, Industry Concentration, and Barriers to Entry

Abstract

In economics, we normally classify markets into four market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. In this chapter, we are interested in understanding why real markets are structured so differently. For example, most agricultural commodities approximate competitive markets, as they have many producers of homogeneous or nearly homogeneous goods. In contrast, the market of computer operating systems is nearly monopolized by Microsoft. In 2009, Microsoft Windows had a market share of approximately 92%, while its nearest competitor, Mac, had a market share of just over 5%.