In field of economics, market structure refers to the number of firms producing identical or similar goods. These market structures include perfect competition and imperfect competition. In this article we will discuss two types of imperfect competition that are monopoly and oligopoly.

Monopoly is an economic situation whereby there is one seller that is selling totally heterogeneous item. Presently discussing Oligopoly, it is a market structure whereby there are a couple number of sellers in the market offering similar items. These two are the critical types of imperfect competition. Both structures affect prices, competition, and consumer choices in different ways.

Monopoly

The term, monopoly signifies ‘sole to sell’. It is a circumstance of market where there is one seller control the market for a specific product or service, supplying products to numerous clients and he have extreme control over it.

The service or product sold by seller is totally unique, which doesn’t have any close substitute. Because of the strength in the entire market, they get the advantage of huge scale production. In monopoly, there is no opposition thus the prices of items are charged very high by the monopolist and price discrimination is also there.

For a deeper understanding of how dominance shapes market behavior, explore the difference between hegemony and ideology, which relates to similar control dynamics beyond economics.

Oligopoly

Oligopoly refers the competition among the few firms. It is economic circumstance where there exists little number of firms, offering contending items in market. Oligopoly exists in market, when two to ten sellers are there, offering similar or marginally diverse items in the market. Firms may compete on price, advertising, or service but each move is calculated with rivals in mind.

Monopoly VS Oligopoly

Some contrasts related to monopoly and oligopoly are explained below

Aspect	Monopoly	Oligopoly
Definition	Monopoly is a type of market structure where there is one seller who offers his particular item and rules the whole market.	Oligopoly is a type of market structure, where there are couples of firms in market that offers either differentiated product or homogeneous and contend in market.
Characteristics	Monopoly is a firm which controls huge market share, along these lines picking up the power to set price.	Oligopoly is a small number of firms which rules the market. These firms rival one another in view of price, product differentiation, client service, and so forth.
Sellers	In monopoly, there is only one seller and there is no competition in this case because of one seller.	In oligopoly, number of sellers are two to ten, so there is competition due to the presence of multiple sellers.
Product Differentiation	In case of monopoly, product differentiation is at extreme and no substitutes of that product are available in market.	In case of oligopoly, product differentiation is not that extreme and similar products or close substitutes are available in market.
Prices	In monopoly, there is price discrimination at high level and also high prices are charged.	In oligopoly, there is price discrimination but at very low level and fair or normal prices are charged.
Control	In monopoly, seller has complete control on price of the product.	In oligopoly, seller has some control on the price of the products.
Price Setter	In monopoly, there is one seller and has no rival in market so seller sets the price itself.	In oligopoly, the price is set according to the price set by the rivals of firms for the same product in market.
Restrictions	In monopoly, restrictions to enter in market are due to institutional, economic, legal and so forth.	In oligopoly, restrictions to enter in market are there because of economies of scale.
Examples	Examples of monopoly are Microsoft, Google, DeBeers, Monsanto, Long Island Rail Road and so forth.	Examples of oligopoly are Health insurers, media, wireless carriers and so forth.

This structure is part of imperfect competition, just like monopolies. For more context, check the difference between advertising and promotion to see how oligopolies compete through non-price strategies.

Power vs. Competition: What Defines a Market’s Behavior?

Whether you’re purchasing internet access, software, or health insurance, you’re constantly dealing with various market structures—without even knowing it. The two most prevalent? Monopoly and oligopoly.

Monopolies are simple to identify. Ever attempted to change search engines or trains and found there is no other provider? That’s the monopoly at work. These markets have no alternatives, so the firm dictates the terms—and the prices. You may enjoy a reliable product, of course, but you also forego variety and leverage. Customers must take what they are given, which is usually at premium prices.

Oligopolies, however, create the illusion of choice. Consider mobile networks or flight tickets. There are several companies, but their prices and packages are usually amazingly similar. That’s because in oligopolies, firms are keeping a close eye on each other. If one lowers its price, the others follow suit immediately. The outcome? You get the benefit of competition, but not as liberally as in perfect markets.

But what does that translate to for the typical consumer or would-be entrepreneur? It means power counts. In monopolies, one firm has the power. In oligopolies, it is distributed—but not broadly. If you’re going into business, knowing whether your sector tilts toward monopoly or oligopoly can dictate your entire strategy.

In the end, monopoly and oligopoly aren’t merely economic jargon—they’re structures that affect how much we pay, what we receive, and how much control we have in the deal.

Conclusion

From the above article we come to know that monopoly is a market structure where one seller is there and sells a unique product by charging high prices and different prices to buyers. As there is only one seller so no competition is there and seller has complete control over price and market. Some restrictions include legal, institutional and economic in case of monopoly.