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Perfectly Imperfect in Every Way

Last month, we talked about market failures; this month we turn to market structures. Market structures describe the extent to which markets are competitive. Though you've heard plenty about the failings of hypothetical market structures like pure monopolies and perfect competition at Econlib, we also know many of you still find yourself teaching and learning this concept. 

The first piece in this month's collection is a brand NEW piece by written by Arnold Kling, an extraordinary economic educator. So start with his Economics Topic Detail, then work your way through the rest. If you find you're still missing something, let us know! We'd love to help you fill in the gaps.

Speaking of YOUR feedback, we're excited to announce the launch of a NEW quarterly newsletter, #TeachEcon, beginning in January 2021, focused on teaching economics. You'll hear from master teachers at all levels, find out about new classroom resources from Econlib and beyond, and discover teaching tips big and small. You can subscribe here to make sure you don't miss our inaugural issue. We're also still looking for contributors, let us know at econlib@libertyfund.org or on social media. 

Finally, if you've been enjoying our QuickPicks collections, you might also be interested in the monthly Teaching Resource collection from our sister site, AdamSmithWorks. Click here to subscribe.

Until next month, stay well and stay curious.

What are Market Structures?
Market structures, or industrial organization, describe the extent to which markets are competitive. At one extreme, pure monopoly means that there is only one firm in an industry. At the other extreme, economists describe a theoretical possibility termed perfect competition.
Representation and Returns for Regular People

Is there a role for government in “nudging” a more equal distribution of profits in the form of increased compensation to workers for their value-added activities? 

In this episode, journalist Noah Smith and EconTalk host Russ Roberts discuss market power and worker compensation. These questions address topics from the conversation, and intend to encourage further thought and shared response.

Industrial Concentration
Industrial concentration” refers to a structural characteristic of the business sector. It is the degree to which production in an industry—or in the economy as a whole—is dominated by a few large firms. Once assumed to be a symptom of “market failure,” concentration is, for the most part, seen nowadays as an indicator of superior economic performance. 
Antitrust
Economists generally believe that monopolies and other restraints of trade are bad because they usually reduce total output, and therefore the overall economic well-being for producers and consumers (see monopoly). Indeed, the term “restraint of trade” indicates exactly why economists dislike monopolies and cartels.
In Defense of Google
The EC accusation illustrates how antitrust can be used as a protectionist instrument and a coercive tool by less-efficient competitors. More generally, it reveals the poverty of the standard antitrust doctrine, which ignores the fact that the pursuit or maintenance of a dominant market position gives firms a strong incentive to innovate.
Shedding Light on Market Power
How do barriers to entry affect a firm's market power? How did the classical economists propose market power should be mitigated compared to 20th century economists?
Cartels
Public policy’s traditional hostility to cartels is rooted in the view, summarized by eighteenth-century economist Adam Smith, that rival sellers will almost always prefer to raise their prices in unison than to aggressively compete for customers by undercutting each other’s prices. But this statement tells only half the story.
Wealth of Nations Reading Guide
Use our color-coded questions to stimulate thought and discussion. This WN excerpt includes the famous quotation, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary."
Public Goods
The imperfections of market solutions to public-goods problems must be weighed against the imperfections of government solutions. Governments rely on bureaucracy, respond to poorly informed voters, and have weak incentives to serve consumers. Therefore they produce inefficiently.
Alleged Causes of Inflation: Corporate Monopolies
It is my belief that competition inheres in the very nature of man and the exchange economy; in the words of Adam Smith, “All systems of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord.”
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