Market Structures (economics)

1. MARKET STRUCTURES

2. What is Market Structures?
The interconnected characteristics of a market
,such as the number and relative strength
of buyers and sellers and degree of collusion
among them, level and forms of competition,
extent of product differentiation, and ease
of entry into and exit from the market

3. Classification of Market
Structure
Regular Market Structure
Special Market Structure

4. Regular Market Structures
Perfect Competition
Monopoly
Oligopoly
Monopolistic Competition

5. Perfect Competition
• It occurs when a large number of
sellers or producers of a good are
present in the market.
• They make the goods always
available.
• None of the firms can individually
affect the price of the product.
• Homogenous or standardized
product

6. Monopoly
• Single firm produces the entire
available products in an industry.
• Special case of imperfect
competition.
• Usually has a great influence over
pricing and output decision.
• Two types:
• natural monopoly
• legislated monopoly

7. Oligopoly
• Characterized by very few sellers
in the market making the
product(s) available for the
consuming public.
• Oil and telecommunication
industries in the Philippines are
example of this.
• Joint-monopoly solution – rivals
cooperate.
• Cartel – Cooperative method to
restrict individual and collective
output.

8. Monopolistic Competition
• Market structure in which there are
enough sellers and each independently of
the others, but are few enough that each
tends to have “monopoly” of its own
specific target market segment.
• Differentiated Products – are those tend
to be similar of nature and purpose, but
are used differently and generally
preferred by specific groups and
costumers.

9. Special Types of Market Structure
Monopsony
Oligopsony

10. Monopsony
• Having a single seller, and there is a
single buyer in the industry.
• Some governments tend to participate
this way in specific and sensitive
industries.
• The purchase of armaments, nuclear
technology and the like tend to be
monopoly of many governments,
assuring that these products will not
be readily available to the public for
national security reasons and
measures.

11. Oligopsony
• Having very few sellers in the
industry and there are only very
few buyers of a particular product.
• Transportation companies such as
airlines and shipping lines tend to
fall into industries with this market
structure.

12. Types of Market
Structure
Types of
Products Sold
in the industry
Number of
sellers in the
Industry
Number of
Buyers in the
industry
Barriers to
Entry or Exit
From the
Industry
Relative
Influence over
the Price of the
Product
Pure Competition Homogenous or
Standardized Many Many None
Little or no
influence; price
takers
Pure Monopoly
Unique One Many Very high
Absolute
influence; seller
is price maker
Monopolistic
Competition Slightly
Differentiated
Many Many Low
Strong influence;
but usually price
taker
Oligopoly Slightly
differentiated Few Many Very high
Very strong
influence- seller;
usually a price
maker with the
others
Monopsony
Usually Unique Few One Very high
Absolute
influence; buyer
is the price
maker
Oligopsony
Slightly
Differentiated
Few to Many Few Very High
Very strong
influence- buyer;
usually a price
maker with the
others
Characteristics of a Market Structure