Market Structure

Market Structure

1. PERFECT COMPETITION

   • Many firms or sellers
     • likely to be small
   • Freedom of entry and exit (Low costs)
   • Identical or homogeneous product
     • often large scale production
   • Demand curve elastic
   • Firms have no market power
   • Normal profit
   • Limited or none influence over price
   • Competitive Market: a market with a number of firms that compete with each other.
   • Examples: Agricultural markets

2. MONOPOLY

   • Complete market power
   • Single seller or firm
     • likely to be big
   • Unique product
   • High barriers for entry and exit (High costs and copyrights)
   • Supernormal profit
   • High influence over price
   • A market with a single supplier
   • Examples: Google or Railways

3. Definition: the conditions which exist in a market including the number of firms.

4. Most markets are in the middle of these 2 types

   • Monopolistic competition
     • nearer to competitive markets
   • Oligopoly
     • nearer to monopolies