MARKET

STRUCTUR
E

MARKET STRUCTURE
Refers to competition prevails in particular market.

 Nature of the product homogenous (identical),

differentiated?

DETERMINANTS OF MARKET
STRUCTURE
Freedom of entry and exit
Control over supply/output
Control over price
Barriers to entry

TYPES OF MARKET
STRUCTURE
1. Perfect competition
a) pure
2. Imperfect competition
b) Monopoly
c) Monopolistic competition
d) oligopoly

PERFECT
COMPETITION
No participant in the market can influence prices.

CHARACTERISTIC OF
PURE COMPETITION

A large number of small firms / sellers

Homogenous product

Very easy entry or exit from the market

TIME TO THINK!
What happened if you try to raise your price?

IMPERFECT
COMPETITION
Firms have some influence over market prices.

MONOPOLY
Consumer has only two choices either buy the
monopolists product or none at all.

Characteristics

A market dominated by one seller or producer

The product is unique

Impossible entry into the market

Monopolist is a price maker and profit maximize

MONOPOLISTIC
COMPETITION
-there are lots of sellers selling similar products that
don't differ a whole lot in terms of characteristics or price.

Characteristics

Many small firms

Selling differentiated products
Easy market entry and exit.

OLIGOPOLY
A situation where there are only a few sellers in a particular
economy who control a particular commodity. They can,
therefore, influence prices and affect the competition.

The product is either homogeneous or differentiated

Difficult market entry

DIFFERENT TERMS
Product differentiation refers to various means of making a
particular product different from other product

Differentiated product are products which had their own

distinguishing characteristics. These differences can be on
quality, design, brand name, packaging, advertising and
promotions.

Homogeneous product product which are identical t the

products of other sellers.

Cartel is a combination of business companies that acts as

if it were a single firm; a division into shares monopoly.

Patent is a legal right granted to an invention that gives the

person holding the patent a monopoly using that innovation.

SPECIAL TYPES OF
MARKET STRUCTURE
1. Bilateral monopoly is a market situation comprising one
seller (like monopoly) and only one buyer.

2. Bilateral oligopoly is a market condition with a

significant degree of seller concentration (like oligopoly) and
a significant degree of buyer concentration.

3. Duopsony is a market situation in which there are only

two buyers but many sellers

4. Duopoly is a subset of oligopoly describing a market

situation in which there are only two suppliers.

5. Monopsony is a form of buyer concentration, that is, a

market situation in which a single buyer confronts many
small.