Market Structures and Competition¶

Summary¶

This chapter analyzes the different types of market structures that exist in the economy. Students will learn about perfect competition, monopoly, oligopoly, and monopolistic competition. The chapter examines how market structure affects pricing, output, and efficiency, and introduces concepts like barriers to entry and market power.

After completing this chapter, students will be able to identify different market structures and analyze how they affect economic outcomes.

Concepts Covered¶

This chapter covers the following 11 concepts from the learning graph:

Market Structure
Perfect Competition
Price Taker
Monopoly
Natural Monopoly
Price Maker
Oligopoly
Monopolistic Competition
Product Differentiation
Barriers to Entry
Market Power

Prerequisites¶

This chapter builds on concepts from:

Why Some Markets Feel Different¶

Here's something you've probably noticed but never quite put into words: buying gas feels different from buying a phone, which feels different from buying coffee, which feels different from paying your electric bill.

At one gas station, you might save 3 cents per gallon by driving across the street. At the Apple Store, there's literally no other place to get a new iPhone. Starbucks is everywhere, but so are dozens of competitors with slightly different vibes. And your electric company? You can't switch even if you wanted to.

Why does this happen? The answer lies in market structure—the organization and characteristics of a market that determine how much competition exists and how much power sellers have over prices. Understanding market structure is like getting X-ray vision for the economy. You'll see why some companies can charge whatever they want while others fight tooth and nail for every customer.

And here's your superpower upgrade: once you understand these structures, you'll be much better at spotting when companies (or politicians) are making claims about "competition" that don't hold up. Ready to see how markets really work?

What is Market Structure?¶

Market structure refers to the characteristics of a market that influence how firms behave and how prices are determined. It's the "personality" of a market.

The key characteristics that define market structure are:

Number of firms: Are there many sellers, a few, or just one?
Type of product: Are products identical or differentiated?
Ease of entry and exit: Can new firms easily join the market?
Information availability: Do buyers and sellers know all the relevant prices?
Pricing power: Can firms influence the market price?

Think of market structure as a spectrum. On one end, you have lots of competition with no one having power. On the other end, you have one company controlling everything. Most real markets fall somewhere in between.

Characteristic	More Competition	Less Competition
Number of firms	Many	Few or one
Products	Identical	Unique
Entry barriers	Low	High
Pricing power	None	Significant
Real examples	Wheat farming	Electric utilities

Diagram: Market Structure Spectrum¶

Market Structure Spectrum MicroSim

Type: microsim

Bloom Taxonomy Level: Understand (L2) Bloom Verb: compare, classify

Learning Objective: Students will compare the characteristics of different market structures and classify real-world markets along a competition spectrum.

Purpose: Provide an interactive visualization showing how market characteristics change as you move from perfect competition to monopoly.

Canvas Layout: - Main area (500px): Horizontal spectrum with slider - Right panel (150px): Current characteristics display

Visual Elements: - Horizontal spectrum bar labeled "Competition Spectrum" - Left end: "Perfect Competition" (bright green) - Center-left: "Monopolistic Competition" (yellow-green) - Center-right: "Oligopoly" (orange) - Right end: "Monopoly" (red) - Draggable marker that user can slide - Characteristics panel showing current values - Icons representing firms (many dots vs. few vs. one)

Interactive Controls: - Draggable slider on spectrum - "Jump to" buttons for each market type - Real-world example dropdown for each position

Characteristics to Display (update as slider moves): - Number of Firms: "Many (1000s)" → "Few (2-10)" → "One" - Product Type: "Identical" → "Differentiated" → "Unique (no substitutes)" - Pricing Power: "None" → "Some" → "Complete" - Entry Barriers: "None" → "Moderate" → "Extreme" - Example Industry: Updates based on position

Data Visibility Requirements: - Stage 1 (far left): Perfect competition - farmers, commodities - Stage 2: Monopolistic competition - restaurants, clothing stores - Stage 3: Oligopoly - airlines, cell carriers - Stage 4 (far right): Monopoly - local utilities, patented drugs

Instructional Rationale: The slider interaction helps learners see market structure as a continuous spectrum rather than four discrete boxes. Moving the slider reveals how characteristics change gradually, reinforcing that most real markets fall between the extremes.

Implementation: p5.js with draggable slider element and dynamic text updates

Perfect Competition: The Benchmark¶

Let's start with an extreme case that almost never exists perfectly in the real world but helps us understand everything else.

Perfect competition is a market structure where many firms sell identical products, no single firm can influence the market price, and firms can freely enter or exit the market.

For perfect competition to exist, you need:

Many buyers and sellers: So many that no single one matters
Identical products: Wheat from Farm A is exactly the same as wheat from Farm B
Perfect information: Everyone knows all prices and qualities
Free entry and exit: Anyone can start selling or quit anytime
No transaction costs: Buying and selling is free and easy

Where do we see something close to this? Agricultural commodity markets come closest. A bushel of corn is a bushel of corn—buyers don't care which farm grew it. There are thousands of farmers, and the Chicago Board of Trade publishes prices that everyone can see.

Online platforms sometimes create near-perfect competition too. If you're selling a generic phone charger on Amazon, you're competing with hundreds of other sellers of essentially identical products. Buyers can instantly compare prices. It's brutal.

Being a Price Taker¶

In perfect competition, each firm is a price taker—a firm that must accept the market price and cannot influence it through its own actions.

Why can't they influence price? Because they're too small. If Farmer Jones tries to sell wheat for $1 more than everyone else, buyers just buy from the thousands of other farmers. If she drops her price below market, she's just losing money for no reason since she could sell all she wants at market price anyway.

The firm's decision becomes simple: "Given this price that I can't change, how much should I produce?" They produce where their marginal cost equals the market price. That's it.

The Price Taker Test

Ask yourself: "If this company doubled its prices tomorrow, what would happen?" If the answer is "everyone would immediately buy from competitors," it's likely a price taker. If the answer is "some customers would stay anyway," it has some pricing power.

Is Perfect Competition Good?¶

Perfect competition has some beautiful properties:

Efficiency: Resources go where they're most valued
Low prices: Competition drives prices down to cost
No excess profits: In the long run, firms earn just enough to stay in business
Consumer power: Buyers call the shots

But it's not all sunshine. Perfect competition can also mean:

No profits for innovation: Why invest in R&D if competitors instantly copy you?
Commodity trap: Products become boring with no differentiation
Race to the bottom: Constant pressure to cut costs (and sometimes quality)

Monopoly: The Opposite Extreme¶

Now let's swing to the other end of the spectrum.

A monopoly is a market structure with only one seller, offering a unique product with no close substitutes, protected by barriers that prevent other firms from entering.

The word "monopoly" comes from Greek: "mono" (one) + "polein" (to sell). One seller.

Monopolies exist because of barriers to entry—obstacles that prevent new firms from entering a market. We'll dig into these later, but examples include:

Legal barriers (patents, licenses, regulations)
Control of essential resources
Extremely high startup costs
Network effects that lock in customers

Examples of monopolies or near-monopolies:

Your local water company
A pharmaceutical company with a patent on a life-saving drug
The only hospital in a rural area
A company that owns the only bridge connecting two regions

Being a Price Maker¶

Unlike the helpless price taker, a monopolist is a price maker—a firm with the power to set its own price within limits set by demand.

Here's the key difference: A monopolist faces the entire market demand curve. If it wants to sell more, it must lower its price. If it raises its price, it sells less (but doesn't lose ALL customers, because there's nowhere else to go).

This gives the monopolist a choice: charge a high price and sell fewer units, or charge a lower price and sell more. The profit-maximizing monopolist finds the sweet spot.

Diagram: Price Taker vs Price Maker Simulator¶

Price Taker vs Price Maker Simulator MicroSim

Type: microsim

Bloom Taxonomy Level: Apply (L3) Bloom Verb: demonstrate, calculate

Learning Objective: Students will demonstrate the difference between price-taking and price-making behavior by experimenting with pricing decisions in each market structure.

Purpose: Let students experience the consequences of pricing decisions in competitive vs. monopoly markets.

Canvas Layout: - Left side (300px): Perfect Competition scenario - Right side (300px): Monopoly scenario - Bottom (100px): Controls and comparison

Visual Elements: - Two side-by-side market displays - Left: Many small firm icons, horizontal demand curve at market price - Right: Single large firm icon, downward-sloping demand curve - Price slider for each scenario - Revenue/Profit display for each - Visual feedback showing customer behavior

Interactive Controls: - Left panel: Price slider (but shows it doesn't matter!) - Right panel: Price slider (shows trade-off) - "Try to Beat Market Price" button (left) - "Find Profit-Maximizing Price" button (right) - Reset button

Scenario Setup: - Left (Competition): Market price fixed at $10 - If you set price above $10: 0 customers (they go elsewhere) - If you set price at $10: Normal customers - If you set price below $10: Same customers but less revenue

Right (Monopoly): You control price
At $20: 50 customers
At $15: 100 customers
At $10: 150 customers
At $5: 200 customers
Show profit calculation at each price point

Data Visibility Requirements: - Show demand curve responding to price changes - Display: Price, Quantity, Revenue, Cost, Profit - Highlight optimal profit point for monopolist

Behavior: - Left side demonstrates futility of trying to be a "price maker" in competition - Right side shows monopolist's power but also the trade-off - Side-by-side comparison reveals the structural difference

Instructional Rationale: Direct experimentation with pricing decisions makes the abstract concept concrete. Students discover for themselves why competitive firms accept market price and why monopolists have choices. The side-by-side format emphasizes the contrast.

Implementation: p5.js with dual interactive panels and real-time calculations

The Problem with Monopoly¶

Monopolies often cause problems:

Higher prices: Without competition, prices rise
Lower quantity: Monopolists restrict output to keep prices high
Inefficiency: Resources aren't allocated optimally
Reduced innovation: Why improve when you have no competitors?
Consumer harm: Fewer choices, lower quality, worse service

This is why governments often regulate monopolies or try to prevent them from forming.

Natural Monopoly: When One is Efficient¶

Not all monopolies are evil conspiracies. Sometimes having just one firm actually makes sense.

A natural monopoly occurs when a single firm can supply the entire market at a lower cost than multiple competing firms could.

This typically happens when:

Fixed costs are extremely high
Marginal costs are very low
The product requires extensive infrastructure

Think about water pipes. Your city has one network of water pipes running under every street. Now imagine if three competing water companies each installed their own separate pipe networks. You'd have three times the infrastructure cost! It's cheaper for everyone to have one company and one set of pipes.

Other examples of natural monopolies:

Electric grid (power lines everywhere)
Natural gas delivery (gas pipes)
Railroads (tracks between cities)
Broadband internet in some areas (fiber optic cables)

The Natural Monopoly Puzzle

Natural monopolies create a dilemma: One firm is most efficient, but one firm also has monopoly power to exploit customers. The typical solution? Government regulation. Utility companies often must get approval before raising rates, ensuring they earn a fair return but don't gouge customers.

Barriers to Entry: The Walls That Keep Competition Out¶

Now let's understand what creates and maintains monopoly power in the first place.

Barriers to entry are obstacles that make it difficult or impossible for new firms to enter a market and compete with existing firms.

Barriers come in several flavors:

Legal Barriers¶

Patents: Exclusive rights to an invention (typically 20 years)
Copyrights: Exclusive rights to creative works
Government licenses: Only certain firms can operate (liquor stores, radio stations)
Regulations: Compliance costs that only big firms can afford

Economic Barriers¶

Economies of scale: Existing firms produce so cheaply that new entrants can't compete
High startup costs: Building a car factory costs billions
Control of resources: If one company owns all the lithium mines, good luck making batteries
Brand loyalty: Customers stick with what they know

Strategic Barriers¶

Predatory pricing: Temporarily slashing prices to drive out new competitors
Exclusive contracts: Locking up suppliers or distributors
Network effects: A product becomes more valuable as more people use it (like social media)

Diagram: Barriers to Entry Builder¶

Barriers to Entry Builder MicroSim

Type: microsim

Bloom Taxonomy Level: Analyze (L4) Bloom Verb: examine, compare

Learning Objective: Students will analyze how different types and combinations of barriers to entry affect market concentration and competition levels.

Purpose: Allow students to build different barrier combinations and see resulting market structures.

Canvas Layout: - Left side (300px): Barrier selection panel - Right side (350px): Resulting market visualization

Visual Elements: - Left panel: List of barrier types as toggleable blocks - Patent protection (shield icon) - High startup costs (factory icon) - Network effects (connected nodes icon) - Government license required (stamp icon) - Economies of scale (graph icon) - Control of key resource (diamond icon) - Right panel: Market visualization - Shows firms as circles (size = market share) - Barrier "wall" visualization around market - Competition meter from "Competitive" to "Monopoly"

Interactive Controls: - Toggle switches for each barrier type - "Barrier strength" slider (low/medium/high) for each active barrier - "Simulate 10 Years" button to show market evolution - Reset button - Example presets: "Pharmaceutical", "Social Media", "Restaurant", "Utility"

Behavior: - As barriers are added, competition meter shifts toward monopoly - Number of firms decreases, remaining firms grow larger - With no barriers: Many equal-sized small firms - With maximum barriers: Single dominant firm

Data Visibility Requirements: - Show: Number of Firms, Largest Firm Share, Consumer Prices (index), Innovation Rate - Each barrier contributes different effects - Display explanation of why each barrier reduces competition

Industry Presets: - Restaurant: No barriers → Many firms, high competition - Streaming Service: Network effects, content library → Oligopoly - Pharmaceutical: Patents, R&D costs → Temporary monopolies - Electric Utility: Infrastructure, licenses → Regulated monopoly

Instructional Rationale: Building barriers piece by piece helps learners see how market concentration develops over time and isn't random. The simulation aspect shows the dynamic evolution rather than just static outcomes.

Implementation: p5.js with toggle interface and animated market simulation

Why Barriers Matter for Critical Thinking¶

When a company (or its defenders) claims that competition is thriving, look for barriers. When they claim regulation is unnecessary because "the market will sort it out," ask what barriers prevent competitors from entering.

Social media misinformation often ignores barriers entirely: "If that company is so bad, why doesn't someone start a competitor?" Well, maybe because the competitor would need $50 billion in infrastructure, or because network effects mean users won't switch, or because the incumbent has locked up all the key patents.

Oligopoly: The Few Who Rule¶

Most markets you interact with aren't pure monopolies or perfectly competitive. They're somewhere in between—usually oligopoly.

An oligopoly is a market structure with only a few large firms that dominate the industry, making them interdependent—each firm must consider how competitors will react to its decisions.

Characteristics of oligopoly:

Few dominant firms (typically 2-10)
Products can be identical (steel) or differentiated (cars)
High barriers to entry
Interdependence—firms watch each other constantly

Examples are everywhere:

Cell phone carriers: In the US, essentially AT&T, Verizon, T-Mobile
Airlines: A handful of major carriers control most routes
Streaming services: Netflix, Disney+, HBO Max, Amazon, Apple TV+
Gaming consoles: PlayStation, Xbox, Nintendo
Search engines: Google dominates, but Bing and DuckDuckGo exist
Social media: Facebook/Instagram, TikTok, YouTube, X/Twitter

Strategic Behavior in Oligopoly¶

Here's what makes oligopoly interesting and frustrating: interdependence.

In perfect competition, a farmer doesn't care what other farmers do—she just produces at market price. In monopoly, the single firm doesn't worry about competitors—there aren't any.

But in oligopoly? Every decision is like a chess move. "If I lower my price, will Verizon match it? If AT&T launches unlimited data, should I follow? If I spend on advertising, will competitors outspend me?"

This leads to some weird outcomes:

Price rigidity: Oligopolists often don't change prices much because they fear triggering a price war
Non-price competition: Instead of cutting prices, firms compete on advertising, features, loyalty programs
Tacit collusion: Without actually meeting (which would be illegal), firms might settle into similar prices just by watching each other

Oligopoly Behavior	What It Looks Like
Price matching	Gas stations across the street with identical prices
Feature competition	Phone carriers all offering "unlimited" with different fine print
Advertising wars	Streaming services spending billions on content
Loyalty programs	Airlines with increasingly complex reward tiers

The Confusing World of Oligopoly Pricing

Ever notice how phone plans are ridiculously complicated? That's not an accident. In oligopolies, firms often make their products hard to compare so you can't easily shop around. They compete on confusion rather than clarity. Your economic superpower: demand clear comparisons. What's the actual cost per GB? What's the total annual cost?

Monopolistic Competition: The Everyday Market¶

Now for the market structure you encounter most often: buying clothes, eating out, getting coffee, streaming content.

Monopolistic competition is a market structure with many firms selling similar but differentiated products, with relatively easy entry and exit.

It's called "monopolistic" competition because each firm has a mini-monopoly over its unique version of the product. Starbucks has a monopoly on Starbucks coffee. But it's still "competition" because tons of competitors sell similar products.

Characteristics:

Many firms: Not as many as perfect competition, but still lots
Differentiated products: Similar but not identical
Low barriers to entry: New firms can join fairly easily
Some pricing power: Firms can charge a bit more for their "special" version

Examples include:

Restaurants (Italian, Thai, burger joints—different but substitutable)
Clothing brands (all making jeans, but each with their own style)
Hair salons and barbershops
Coffee shops
Streaming content (the shows are different, but they're all "entertainment")

The Power of Product Differentiation¶

Product differentiation is the process of making a product distinct from competitors' products in ways that matter to consumers.

Differentiation can be:

Real: Better ingredients, more features, higher quality
Perceived: Better branding, cooler image, nicer store design
Location-based: The closest coffee shop to your house
Service-based: Friendlier staff, faster delivery

Here's the clever part: product differentiation creates a little bit of market power. If you're convinced that your favorite brand is somehow special, you'll pay more for it even if objectively similar products exist for less.

Companies spend billions on branding, packaging, and advertising—not just to inform you, but to differentiate their products in your mind.

Critical Thinking: Real vs. Fake Differentiation¶

Your economic superpower here is distinguishing between differentiation that adds real value and differentiation that's just marketing.

Ask yourself:

Would I buy this if it were in plain packaging?
Is the "premium" version actually better, or just more expensive-looking?
Am I paying for quality, or am I paying for the brand story?
Could I get the same thing for less somewhere else?

Sometimes differentiation IS real value—a well-designed product, better service, a trusted brand. But sometimes it's just a way to charge more for essentially the same thing.

Market Power: The Ability to Control¶

Now let's tie everything together with the capstone concept.

Market power is a firm's ability to raise prices above the competitive level without losing all its customers.

Market power is the opposite of being a price taker. It's what lets firms charge more, and it's what consumers usually wish firms had less of.

Market power comes from:

Being the only seller (monopoly)
Having few competitors who don't want to start price wars (oligopoly)
Having a differentiated product that some customers prefer (monopolistic competition)
High barriers that prevent new competitors from entering

Market Structure	Market Power Level	Source
Perfect Competition	None	Too many competitors
Monopolistic Competition	Low	Product differentiation
Oligopoly	Moderate to High	Few competitors, barriers
Monopoly	Maximum	Only seller, high barriers

Measuring Market Power¶

Economists measure market concentration (and indirectly, market power) using tools like:

Market Share: What percentage of total sales does each firm have?

Concentration Ratio (CR4): The combined market share of the top 4 firms - CR4 < 40%: Competitive market - CR4 > 60%: Oligopoly - CR4 = 100%: Monopoly

Herfindahl-Hirschman Index (HHI): Sum of squared market shares—gives more weight to larger firms - HHI < 1,500: Unconcentrated - HHI 1,500-2,500: Moderately concentrated - HHI > 2,500: Highly concentrated

The US government uses HHI to evaluate whether mergers should be allowed. A merger that would push HHI above 2,500 gets extra scrutiny.

Diagram: Market Power in Real Industries¶

Real Industries Market Structure Map Infographic

Type: infographic

Bloom Taxonomy Level: Analyze (L4) Bloom Verb: classify, compare

Learning Objective: Students will classify real industries into market structure categories and analyze the sources of market power in each.

Purpose: Show where real companies and industries fall on the market structure spectrum with data-backed positioning.

Layout: Visual map with industry bubbles positioned by competition level

Visual Elements: - Horizontal axis: Level of competition (high to low) - Vertical axis: Product differentiation (identical to unique) - Industry bubbles of different sizes (size = market size) - Color coding by market structure type - Lines connecting related industries

Industries to Include: Perfect Competition Zone (few examples): - Commodity wheat: Many farmers, identical product - Basic web hosting: Many providers, standard service

Monopolistic Competition Zone: - Restaurants: Bubble showing many chains and independents - Clothing retail: Many brands, differentiated styles - Streaming (content): Netflix, Disney+, etc.—many options, differentiated content

Oligopoly Zone: - Cell carriers: Show AT&T, Verizon, T-Mobile sizes - Airlines: Show major carriers - Streaming (platforms): The services themselves - Search engines: Google dominant, others small - Social media: Major platforms

Monopoly/Near-Monopoly Zone: - Local utilities: Water, electric - Operating systems: Windows and Mac (duopoly, but with dominant shares) - App stores: Apple (iOS), Google (Android)

Interactive Elements: - Hover over any bubble to see: - Industry name - Approximate CR4 ratio - Main barrier types - Example companies - Why it's positioned here - Click to "pin" and compare two industries

Data Display: - CR4 concentration ratio - Number of major players - Entry barrier types (icons) - Consumer impact score

Instructional Rationale: Mapping real industries helps learners apply abstract market structure concepts to their daily experiences. The spatial layout reinforces that market structure is multidimensional (competition AND differentiation matter).

Implementation: HTML/CSS/JavaScript with SVG positioning and hover interactions

Putting It All Together: The Market Structure Toolkit¶

You now have a complete framework for analyzing any market. When you encounter a company, product, or industry, ask:

How many sellers? One, few, or many?
What kind of product? Identical, differentiated, or unique?
How hard is entry? Can new competitors easily enter?
What's the pricing power? Price taker or price maker?

Question	Perfect Competition	Monopolistic Competition	Oligopoly	Monopoly
How many sellers?	Many	Many	Few	One
What product?	Identical	Differentiated	Varies	Unique
Entry barriers?	None	Low	High	Extreme
Pricing power?	None (price taker)	Low	Moderate	High (price maker)
Example	Wheat farms	Coffee shops	Airlines	Water utility

Critical Thinking: Spotting Market Structure Misinformation¶

Now that you understand market structures, you're equipped to spot economic misinformation in the wild.

Red Flag #1: 'Competition will solve everything'

Reality check: What barriers to entry exist? In highly concentrated markets with strong barriers, new competition may never arrive. When someone says "if consumers don't like it, they can switch," ask: switch to what? At what cost?

Red Flag #2: 'We have lots of competitors'

Reality check: Count the actual alternatives. Saying "there are thousands of restaurants" doesn't mean much if we're talking about fast-food burgers where three companies control 80% of the market. Define the market correctly.

Red Flag #3: 'This merger won't reduce competition'

Reality check: Every merger reduces the number of competitors by definition. The question is whether it matters. If two oligopolists merge, competition decreases significantly. If two of ten thousand farmers merge, it doesn't matter.

Red Flag #4: 'Our premium pricing reflects quality'

Reality check: Is the quality difference real or perceived? In monopolistic competition, some premium prices reflect genuine differentiation, but some are just successful branding. Look at objective comparisons, not marketing claims.

Red Flag #5: 'Regulation hurts consumers'

Reality check: In perfectly competitive markets, regulation often does add costs without benefits. But in monopoly or oligopoly, regulation might be the only thing preventing exploitation. The answer depends on the market structure.

Key Takeaways¶

You've now added powerful tools to your economic toolkit:

Market structure determines how much competition exists and who has power
Perfect competition is the benchmark—many firms, identical products, no one has pricing power
Price takers must accept market prices; price makers can set their own (within limits)
Monopoly is one firm with complete market power, often harmful to consumers
Natural monopolies can be efficient when infrastructure makes one firm cheapest
Barriers to entry (legal, economic, strategic) create and maintain market power
Oligopolies have few firms that must think strategically about competitors' reactions
Monopolistic competition means many firms with slightly differentiated products
Product differentiation creates mini-monopolies but also real consumer choices
Market power is the ability to set prices above competitive levels
Real markets exist on a spectrum—most fall between the extremes

Using Your Market Structure Superpower¶

Here's how to apply what you've learned in everyday life:

When evaluating a purchase:

Who else sells this? What are my real alternatives?
Is the price high because of quality or because of limited competition?
Am I paying for differentiation I actually value?

When hearing economic claims:

What market structure is being assumed?
Do barriers prevent the competition that's being claimed?
Is "the market will fix it" realistic given the structure?

When thinking about policy:

Does this market need regulation, or is competition already working?
Will this merger significantly increase concentration?
Are barriers to entry natural or artificial?

You've now got X-ray vision for markets. Use it wisely!

Next Steps¶

Now that you understand how market structures affect competition and pricing, the next chapter explores what happens when markets don't work perfectly. In Chapter 6: Market Failures and Externalities, you'll learn about situations where even competitive markets produce outcomes that aren't ideal—and what can be done about it.

Your economic superpowers are growing. Let's keep going!