The most common imperfect market structures are monopolies and oligopolies. A Monopoly is a market situation where a single seller exists and has complete control over an industry (Cerrington 1999). In the US, there a quite a number of monopolies in the industry like Apple (iTunes). There are two kinds of monopolies monopoly and pure monopoly. Both have similarities overall but the general distinction would be a pure monopoly refers to market for a good that has no good substitutes. For example, a single rail transit in a city may be considered a monopolist in the sense that it is the sole provider of light railway transport services. However, with the presence of buses and taxi cabs playing the same routes, it cannot be considered a pure monopolist. There are several misconceptions about monopolies that must at once be rectified. First, being a monopolist doesnt ensure the firm an instant profit. There are instances that a monopolists costs are so high and the market size is very small. Second, it is no true that the firm can impose any price it wants. The maximum price that a monopolist can charge is dictated by the market demand thee monopoly faces. Lastly, a monopolist cannot maximise profit at the inelastic region of the market demand curve (Portbar et al. 2008).
On the other hand, an Oligopoly is a market structure with few sellers. There are two types of oligopolies pure and differentiated. Pure oligopolies sell homogeneous products and there are little perceived differences between the products (Gromsci 1998). An example of this would be the cement industry. In differentiated oligopolies, firms sell products that vary in quality. The automotive industry and the computer industry are good examples. These examples showcase differences in product quality, size shape, performance, power, speed, and many more. Unlike monopolies, oligopolies can also be classified according to the marketing strategies. This is not seen in monopolies since there is only a single producer present. In oligopolies, firms may either collude or act independently. Oligopolies maximize their profits by getting their marginal revenue to equal with their marginal costs. Furthermore, Oligopolies also depend on other sellers wit regards to their pricing. This is called collusion. An example of an organization of colluding firms is OPEC. They control the world oil prices.