Market Structure

The selling environment in which a firm produces and sells its products

Types of Market Structure

Monopoly Oligopoly Monopolistic Competition Perfect Competition

Monopoly
Monopoly exists when a single firm is a sole producer of a product for which there are no close substitutes

EXAMPLE OF MONOPOLY Pakistan Railways

Decreased Market Share

11% of total petroleum

products and 2% of the total containers are transported

Corruption Lack of action & planning

Price maker
But government has a slight control over prices

Brand Power

Barriers
No Entry & Exit

Oligopoly

Oligopoly

A situation in which a particular market is controlled by a small group of firms

Types of cement Producer

D G Khan cement Lucky cement Best way cement Maple leaf Gariwal cement

Market share

Maple leaf 11% D G Khan 13% Lucky cement 20% Best way 13.2% Gariwal cement 10% Other cement 32%

Maple leaf DG Khan Lucky Best way Other Gariwal

Lucky cement
Lucky cement has a 20 % market share. It cover a large market share. It has price maker. Most of the customer buy the lucky cement. It has a great brand power.

Prices Of Cement
430 425

420

415 price

410

405

400 Mapel leaf D G Khan cement lucky cement best ways cement fogi cement painor cement

Barriers to entry or exit

Monopolistic competition

Definition
Several or many seller each produce similar, but slightly differentiated product.

Example of monopolistic competition

Soaps

Different type of soap

Lux Capri Dove Safeguard Detol Rucona Tibet

Graph of monopolistic competition

Market share
Lux 25% Capri 10% Safeguard 15% Dove 5% Dettol 20%

Prices of these products

Product Prices Rs.

Lux

45

Dove

95

Capri

35

Barriers of entry or exit

Barriers of entry or exit

Perfect competition:
Perfect competition describes markets which involve very large number of firms producing a standardized product .

Example of perfect competition

Sugar

industry

Price takers:

In a perfect competition market individuals do not exert control over product market price.

Demand curve is perfectly elastic

Price equals marginal revenue MC=MR

Market price:

Market price in perfect competition is approximately the same that is 56/kg in the case of sugar industry.

Barriers of entry or exit