Market Distortion

Monopoly, oligopoly and cartels are examples of market distortion, i.e. supply markets that do not result in free and open competition. Monopoly – a market with a single supplier – and monopsony – a market with a single buyer – are structures that distort the market. Oligopoly – a few large suppliers – and oligopsony – a few large buyers, are market structures with a high degree of concentrated power amongst a small number of participants. These participants exercise power to extract value from other market participants, resulting in higher prices and less productivity than would be the case in a free market structure. Cartels represent collusive market behaviour in favour of the participants and against the interests of the consumer. See also Market Analysis and Market Failure.