Everything about Market Structure totally explained
In
economics,
market structure (also known as
market form) describes the state of a
market with respect to competition.
The major market forms are:
- Perfect competition, in which the market consists of a very large number of firms producing a homogeneous product.
- Monopolistic competition, also called competitive market, where there are a large number of independent firms which have a very small proportion of the market share.
- Oligopoly, in which a market is dominated by a small number of firms which own more than 40% of the market share.
- Oligopsony, a market dominated by many sellers and a few buyers.
- Monopoly, where there's only one provider of a product or service.
- Natural monopoly, a monopoly in which economies of scale cause efficiency to increase continuously with the size of the firm.
- Monopsony, when there's only one buyer in a market.
The imperfectly competitive structure is quite identical to the realistic market conditions where some
monopolistic competitors,
monopolists,
oligopolists, and
duopolists exist and dominate the market conditions.
These somewhat abstract concerns tend to determine some but not all details of a specific concrete
market system where buyers and sellers actually meet and commit to
trade.
The correct sequence of the market structure from most to least competitive is perfect competition, imperfect competition,oligopoly, and pure monopoly.
The main criteria by which one can distinguish between different market structures are: the number and size of producers and
consumers in the market, the type of
goods and
services being traded, and the degree to which
information can flow freely.
Further Information
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