Market Structure and Types of Market Structure
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Transcript of Market Structure and Types of Market Structure
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MarketStructure
BY:-Mithilesh Trivedi
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What is The market Structure?
Those characteristics of the market that significantly affect the behavior and interaction of buyers and sellers.
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Things To Be Considered
Number and size of sellers and buyers
Type of the product Conditions of entry and exitTransparency of information
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Types Of Market Structure
1.Pure (perfect) Competition2.Monopoly3.Monopolistic Competition4.Oligopoly
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Pure (perfect) Competition
Many and small sellers, so that no one can affect the market
Homogeneous productFree entry to and exit from the industryTransparent and free information
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Curves in Perfect Competition
E
(Industry:– Price maker) (Firm:-Price takes)
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Monopoly1. A single seller: the firm and industry are
synonymous.2. Unique product: no close substitutes for
the firm’s product.3. The firm is the price maker: the firm has
considerable control over the price because it can control the quantity supplied.
4. Entry or exit is blocked.
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Curve in Monopoly
AC:-Average CostMC:-Marginal
Cost
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Monopolistic Competition
Multiple firms produce similar productsFirms face down sloping demand curvesProfit maximization occurs where MC=MRIn the limit, firms compete away economic
profits
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Curve in Monopolistic Competition
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Oligopoly Few large firms: each must consider its rivals’ reactions in
response to its decisions about prices, output, and advertising.
Standardized or differentiated products Entry is hard: economies of scale, huge capital investment
may be the barriers to enter.
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Curve in Oligopoly Competition
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