This document discusses market structure and its components. It defines market structure as the characteristics of a market that influence how buyers and sellers interact and behave. The key components of market structure are the number of buyers and sellers, type of product, conditions of entry and exit, and availability of information. The main types of market structure discussed are perfect competition, monopoly, oligopoly, and monopolistic competition. Perfect competition has many buyers and sellers and a homogeneous product. A monopoly has a single seller. Oligopoly and monopolistic competition are forms of imperfect competition that deviate from perfect competition.

1. Prepared by
K.MOHANAKRISHNAN
I M.Sc (Agricultural Economics)
PAJANCOA&RI

2. MARKET STRUCTURE
Market
“A market consists of all the potential customers sharing a
particular need or want who might be willing and able to engage in
exchange to satisfy that need or want” (Philip Kotler).
Market Structure
Those characteristics of the market that significantly affect the
behavior and interaction of buyers and sellers.

3. Components of Market Structure
1.Number and size of sellers and buyers ( single, few, many)
2.Type of the product ( homogenous, heterogenous)
3.Conditions of entry and exit (free entry or exit and barrier to entry or exit)
4.Transparency of information (perfect information of market)

4. Types of Market Structure
1.Perfect Competition – many sellers and buyers
2.Imperfect Competition – deviation from perfect competition
i.Monopoly – single seller and many buyers
ii.Oligopoly – many buyers and few sellers
iii.Monopolistic – many buyers and sellers, homogenous
product

5. Concentration and Competition of Market Structure

6. Classification of Market Structure

7. Perfect Competition
Perfect copetiton is a market structure in which there are
many sellers and buyers transacting a homogenous product.
i. Many sellers and buyers, so that no one can affect the market
ii. Homogeneous product
iii. Free entry to and exit from the industry
iv. Transparent and free information

8. Homogenous product
The goods are sold by different sellers as exactly alike from the
consumers regard.
Free entry and exit

9. Imperfect Competition
Any deviation from the condition of perfect competition in a
market leads to the existence of imperfect of competition.
Types in imperfect competition
i.Monopoly
ii.Duopoly
iii.Monopolistic

10. Monopoly
Monopoly is a market structure in which there is single sellers
instead of many buyers.
i.Only one producer in the industry
ii.The product does not have close substitutes
iii.Blocked entry
iv.Informations are imperfect

11. Oligopoly
It represents the presence of a few firms in the market ,producing
either a homogenous product which are close but not perfect substitutes
to each other.
i. presence of few sellers
ii. products homogenous are close but not perfect
iii. sellers nor consumers are fully aware of the cost, price, quality
and quantity sold by different sellers.

12. These two types derived from Oligopoly market.
Monopsony
Monopsony means the presence of a many sellers for the products
produced by the firms. Ex. sugar factory purchase sugarcane from
farmers.
Oligopsony
It’s from the buyers side in a market. There are only few buyers
and many sellers. Ex. Buying gas from government.

13. Monopolistics
It’s a market situation in which are transected products of various
firms are not prefect substitutes. Firms in the industry is heterogeneous
products.
The price that he can earn the most and sell most of its product.