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Economics
Market Structure
Definitions of Market
 A market is defined as the total of all the
buyers and sellers in the area or region under
consideration. The area may be the earth, or
countries, regions, states, or cities.
A market is a medium that
allows buyers and sellers of a specific good or
service to interact in order to facilitate an
exchange
Types of Market
Pure & Perfect competition
Monopolistic / imperfect competition
Oligopoly competition
Duopoly
Monopoly competition
Cartels
Pure & Perfect competition
 The situation prevailing in a market in which
buyers and sellers are so numerous and well
informed that all elements of monopoly are
absent and the market price of a commodity is
beyond the control of individual buyers and
sellers.
Features of perfect market
 All firms sell an identical product
 All firms are price takers - they cannot control
the market price of their product
 All firms have a relatively small market share
 Buyers have complete information about the
product being sold and the prices charged by
each firm
 The industry is characterized by freedom of entry
and exit. Perfect competition is sometimes
referred to as "pure competition".
Monopolistic / Imperfect competition
 Imperfect competition is a competitive market
situation where there are many sellers, but
they are selling heterogeneous (dissimilar)
goods as opposed to the perfect competitive
market scenario. As the name suggests,
competitive markets that are imperfect in
nature.
Characteristics of Imperfect competition
 Large number of buyers & sellers
 Product differentiation
 Selling cost
 Free entry & exit of firms
 Price makers
 Products are substitute to each other
Oligopoly
 An oligopoly (from Ancient
Greek ὀλίγος (olígos) "few" + πωλεῖν (polein)
"to sell") is a market form wherein
a market or industry is dominated by a small
number of sellers (oligopolists). Oligopolies
can result from various forms of collusion
which reduce competition and lead to higher
prices for consumers.
Characteristics of oligopoly
Duopoly
 A duopoly is a situation in which two
companies own all or nearly all of the market
for a given product or service. A duopoly is the
most basic form of oligopoly, a market
dominated by a small number of companies.
Characteristics of Duopoly
 Existence of only two sellers
 Independence
 Presence of monopoly elements
 Little barrier
Monopoly
 A monopoly exists when a specific person
or enterprise is the only supplier of a
particular commodity.
Monopolies can be established by a
government, form naturally, or form by
integration.
Characteristics of monopoly
 Profit maximizer
 Price maker
 High barriers
 Single seller
 Price discrimination
Source of Monopoly
 Economic barrier
 Economies of scale
 Capital requirement
 Technical superiorities
 No substitutes
 Control of natural resource
 Legal barriers
Cartels
 A cartel is an organization created from a
formal agreement between a group of
producers of a good or service to regulate
supply in an effort to regulate or manipulate
prices.
Market structure

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Market structure

  • 2. Definitions of Market  A market is defined as the total of all the buyers and sellers in the area or region under consideration. The area may be the earth, or countries, regions, states, or cities. A market is a medium that allows buyers and sellers of a specific good or service to interact in order to facilitate an exchange
  • 3. Types of Market Pure & Perfect competition Monopolistic / imperfect competition Oligopoly competition Duopoly Monopoly competition Cartels
  • 4. Pure & Perfect competition  The situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.
  • 5. Features of perfect market  All firms sell an identical product  All firms are price takers - they cannot control the market price of their product  All firms have a relatively small market share  Buyers have complete information about the product being sold and the prices charged by each firm  The industry is characterized by freedom of entry and exit. Perfect competition is sometimes referred to as "pure competition".
  • 6.
  • 7. Monopolistic / Imperfect competition  Imperfect competition is a competitive market situation where there are many sellers, but they are selling heterogeneous (dissimilar) goods as opposed to the perfect competitive market scenario. As the name suggests, competitive markets that are imperfect in nature.
  • 8. Characteristics of Imperfect competition  Large number of buyers & sellers  Product differentiation  Selling cost  Free entry & exit of firms  Price makers  Products are substitute to each other
  • 9. Oligopoly  An oligopoly (from Ancient Greek ὀλίγος (olígos) "few" + πωλεῖν (polein) "to sell") is a market form wherein a market or industry is dominated by a small number of sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers.
  • 11. Duopoly  A duopoly is a situation in which two companies own all or nearly all of the market for a given product or service. A duopoly is the most basic form of oligopoly, a market dominated by a small number of companies.
  • 12. Characteristics of Duopoly  Existence of only two sellers  Independence  Presence of monopoly elements  Little barrier
  • 13. Monopoly  A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity. Monopolies can be established by a government, form naturally, or form by integration.
  • 14. Characteristics of monopoly  Profit maximizer  Price maker  High barriers  Single seller  Price discrimination
  • 15. Source of Monopoly  Economic barrier  Economies of scale  Capital requirement  Technical superiorities  No substitutes  Control of natural resource  Legal barriers
  • 16. Cartels  A cartel is an organization created from a formal agreement between a group of producers of a good or service to regulate supply in an effort to regulate or manipulate prices.