market structures

2. This is the reason why studying
market structures is important
because in this lesson we will
learn how market structures
influence the decision making of
the household when it comes to
buying products and also setting
prices.

4. IT IS ORGANIZATIONAL AND OTHER
CHARACTERISTICS OF A MARKET
SELLING ENVIRONMENT IN WHICH A FIRM
PRODUCES AND SELL ITS PRODUCTS
IT IS DEFINE AND DIFFERENTIATE BY THREE
DIFFERENT CATEGORIES

5. 1. NUMBER OF FIRMS IN THE MARKET
2. DEGREE OF PRODUCT DIFFERENTATION
3. EASE OF ENTRY AND EXIT OF FIRMS

6. THIS REFERS TO THE SIZE OF THE FIRMS OR
SELLER IN THE MARKET
ARE THE MANY, FEW OR ONLY ONE SELLER IN
THE MARKET?

7. THIS REFERS TO NATURE OF THE PRODUCT
ARE THE GOODS AND SERVICES JUST SIMILAR OR
DIFFERENT OR ASSORTED?

8. THIS REFERS TO THE FREEDOM TO ENTER OR
EVEN EXIT THE MARKET
IS IT EASY TO GENERATE OR BUILD A BUSINESS/
FIRMS IN THE MARKET?

10. Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition

11. Firms do not have control over the
products’ prices
Note: They are the price takers and consumers are the price
maker
There are many buyers and sellers
Firms produce a homogenous product.
Note: Because all suppliers offer an identical product, no buyer is
willing to pay more for one particular firms’ product.

12. Firm can easily enter or leave the
industry. There are no obstacles preventing
new firms from entering profitable markets
or preventing existing firms from leaving
unprofitable markets.

14. Firms have control over the products’
prices
Note: They are the price makers and consumers are the price
takers
There is only one seller
No competition at all
Firm produce a unique product.
Note: Because monopoly is the sole supplier of a product it
has no close substitutes

15. Firm can not easily enter.
There are a lot of barriers in entering this
type of market structure.
These barriers include:
 Large capital is needed
 control of a physical resource;
 legal restrictions on competition;

17. Firms have control over the products’
prices, but they are interdependent with
each other.
Note: That is why there is what we call Cartel and Collusion
There are relatively few number of
firms, but always more than one.

18. Firms produce a homo/heterogenous
product.
Firm can not easily enter because the
are some barriers in entering this type of
market structure
 Large capital is needed
 several well-established and successful large firms already
dominate the space, and those companies typically offer the most
premium and well-known goods and services.

20. Firms have control over the products’
prices.
Note: But it is based on the products/services quality and brand.
Many firms are present in this type of
market structure.
Note: Many but not as much as perfect competition
Firms produce heterogenous with close
substitute
Note: They thrive on innovation and variety

21. Firms can easily enter because there is
freedom but not as free as perfect
competition.
 Affordable capital
There is competition but consumers
based their purchase on their preferred
brand and quality