These two cases provide examples of markets that are characterized neither as perfect competition nor monopoly.

Instead, these firms are competing in market structures that lie between the extremes of monopoly and perfect

competition. How do they behave? Why do they exist? We will revisit this case later, to find out what happened.

Perfect competition and monopoly are at opposite ends of the competition spectrum. A perfectly competitive

market has many firms selling identical products, who all act as price takers in the face of the competition. If

you recall, price takers are firms that have no market power. They simply have to take the market price as

given.

Monopoly arises when a single firm sells a product for which there are no close substitutes. We consider

Microsoft, for instance, as a monopoly because it dominates the operating systems market.

What about the vast majority of real world firms and organizations that fall between these extremes, firms that
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