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Industry

Definition

An industry refers to a group of firms that produce similar goods or provide similar services. Firms within an industry often compete with each other for customers.

Analogy

Imagine an industry like a shopping mall where different stores sell similar products. Each store tries to attract customers by offering competitive prices, quality products, or unique experiences.

Related terms

Perfect competition: Perfect competition is an ideal market structure characterized by many small firms selling identical products at the same price. There are no barriers to entry or exit for firms in perfect competition.

Monopoly: A monopoly occurs when there is only one firm in the entire industry, giving it exclusive control over supply and pricing decisions. Barriers to entry prevent other firms from entering the market.

Oligopoly: An oligopoly refers to a market structure with a few large firms dominating the industry. These firms may have significant control over prices and often engage in strategic behavior to compete with each other.