A Glance At Market Economics

Perfect Competition: Many buyers and many sellers, perfect information access is imperative to this market type, price determined by supply and demand with perfect information.

Monopolistic Competition: A few sellers and many buyers. As a result, price is usually set by the owners of the Monopoly. There is some price competition but price collusion is more plausible in this market type.

Monopoly: One seller and many buyers. The seller sets the price in this market as well as its impact on the socioeconomic environment.

Oligopoly: Few sellers and many buyers, typically has a cartel which employs forms of price collusion, typically on the production side of the market equation.

These markets develop in all societies in a capitalistic system. As a result of the market type, governmental regulation is usually considered, legislated and enacted in order to provide what society deems as an acceptable set of rules that govern socioeconomic impact. When government’s partnership with companies in these four markets, or (any combination thereof) is disrupted, then market turmoil manifests itself. Market turmoil is the result of the private sector (companies), the public sector, and the demand for a given product or service that has become out of balance. An out of balance situation in this context is one in which confidence is broken, money is concentrated in too few hands, and institutions have difficulty functioning and providing reserves for demand on money due to law not keeping pace with socioeconomic change.

When the partnership between government, the private sector (companies), and the people become out of balance the reality is that the legislative process comes to a halt. The legislative process is reactionary by definition. In order to maintain balance a society must reduce the risk of legislative latency. This is the crux of depressions and recessions.