In which market structures are economic profits possible in the long run?

Economic profits can be sustained in the long run primarily in monopoly and oligopoly market structures. In a monopoly, a single firm dominates the market, allowing it to set prices above marginal cost without facing competition. This creates a situation where the firm can maintain economic profits over time, as there are high barriers to entry that prevent other firms from entering the market and eroding these profits.

In an oligopoly, a few firms hold significant market power. These firms may also collaborate or engage in strategic behavior, such as setting prices or output levels, which can lead to sustained economic profits. While competition is present, the interdependence of firms means that they can maintain higher pricing strategies compared to more competitive markets, leading to profits that can persist in the long run.

In contrast, in perfect competition, economic profits are driven to zero in the long run due to the entry of new firms attracted by the profits, which increases supply and drives prices down. Monopolistic competition shares some characteristics of both perfect competition and monopoly and typically experiences a situation where economic profits are only possible in the short run, as new entrants will eventually erode those profits.