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Analyze market structures across perfect competition, monopolistic competition, oligopoly, and monopoly to predict firm behavior and market outcomes.
Passed 18 of 23 test cases with the skill, and 13 of 23 without it.
and 5 more in the full report
6 fixed12 passed either way4 still failing1 broke
Tokens, turns and time describe resource use, not a dollar price.
One of 6 test cases the skill fixed. Same model, same prompt, with and without the skill.
Analyze the transatlantic passenger airline market between New York (JFK) and London (LHR), dominated by major carrier alliances.
| Checked | Without skill | With skill |
|---|---|---|
| Classifies transatlantic passenger flight routes as an oligopoly. | Passed | Passed |
| Predicts strategic interdependence where pricing changes by one carrier trigger immediate competitive reactions. | Missed | Passed |
The instructions your model reads when the skill loads.
Market structure determines how firms compete, set prices, and earn profits. The four structures — perfect competition, monopolistic competition, oligopoly, monopoly — predict increasingly different behaviors as concentration rises and differentiation increases.
IRON LAW: Structure Determines Behavior, Not Vice Versa
Classify the market structure FIRST based on structural characteristics
(number of firms, barriers, differentiation), THEN predict behavior.
"This company charges high prices" does not mean it's a monopoly —
high prices can occur in oligopolies and even monopolistic competition.
| Feature | Perfect Competition | Monopolistic Competition | Oligopoly | Monopoly |
|---|---|---|---|---|
| Firms | Very many | Many | Few | One |
| Product | Homogeneous | Differentiated | Homogeneous or differentiated | Unique, no close substitutes |
| Entry barriers | None | Low | High | Very high |
| Price power | None (price taker) | Some (limited by substitutes) | Significant (interdependent) | Full (price maker) |
| Long-run profit | Zero (economic) | Zero (economic) | Positive possible | Positive |
| Examples | Agricultural commodities, forex | Restaurants, clothing | Airlines, telecom, auto | Utilities, patents |
Perfect Competition: Price = marginal cost. Firms are price takers. No advertising needed. Long-run economic profit = 0.
Monopolistic Competition: Short-run profits possible through differentiation. Long-run: entry erodes profits to zero. Firms compete on brand, quality, location.
test cases passed, vs 13 / 23 without
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