If the government limits the number of firms in a market by issuing a limited number of licenses, the market structure is most likely to be

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If the government limits the number of firms in a market by issuing a limited number of licenses, it means that there are only a few firms in the market; this is the characteristic of an oligopoly. In a perfectly competitive market, there are many firms, while in a monopoly, there is only one firm dominating the market. A monopolistically competitive market is characterized by many firms, but they differentiate their products. Therefore, the best choice is an oligopoly.

If the Government Limits the Number of Firms in a Market