Market Structure

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Market Structure

  1. 1. MARKET STRUCTURE
  2. 2. Classification of markets TIME PLACE COMPETITION IMPERFECT LOCAL Very Short Period COMPETITION MONOPOLY NATIONAL Short Period INTERNATIONAL DUOPOLY Long Period MONOPOLISTIC COMPETITION Very Long Period OLIGOPOLY PERFECT COMPETITION
  3. 3. PERFECT COMPETITION • A theoretical market structure. • Competition among sellers and buyers prevails in its most perfect form. • Single market price prevails for a commodity. • The industry that most closely resembles perfect competition - Agriculture.
  4. 4. CHARACTERISTICS OF PERFECT COMPETITION • • • • • • • • • Infinite buyers and sellers Zero entry and exit barriers Perfect factor mobility Perfect information Profit maximization Homogenous products Non-increasing returns to scale Rational buyers No externalities
  5. 5. PRICE DETERMINATION UNDER PERFECT COMPETITION
  6. 6. IMPORTANCE • Simple & convenient form of market to understand. • Gives a clear insight to how a market economy works. • First step in understanding nature of complex forms of market structure. • Ideal form of market under normative grounds.
  7. 7. IMPERFECT COMPETITION • Introduced by Mrs. Joan Robinson and Chamberlin. • A type of market that does not operate under the rigid rules of perfect competition. • Forms of imperfect competition include monopoly, duopoly, oligopoly, monopolistic competition.
  8. 8. OLIGOPOLY Market structure in which there are few firms producing either identical products or differentiated products. “COMPETITION AMONG FEW”
  9. 9. FEATURES • • • • • • • • • Few sellers Inter-dependence High cross-elasticity Advertising Constant struggle Lack of uniformity Lack of certainty Price rigidity Kinked demand curve
  10. 10. KINKED DEMAND CURVE • Increase in price - Elastic • Decrease in price - Inelastic
  11. 11. TYPES OF OLIGOPOLY • Pure and Differentiated Oligopoly • Price Leadership
  12. 12. COMMON EXAMPLES • Operating Systems : Apple, Microsoft. • Gaming Consoles : Nintendo, Sony, Microsoft. • Confectioneries : Nestlé, The Hershey Company and Mars. • Indian Telecommunication : Airtel, Vodafone, Idea, Reliance.

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