Market structure refers to the competitive environment in which buyers

and sellers operate. Competition is rivalry among various sellers in the market.

As a student, you are familiar with the word competition. You are exposed to

competition in school: spelling bees, quiz bees, and sports fests. On the

television, you watch beautiful girls from all over the world compete for the Miss

Universe or Miss World title. You see how the various teams of the PBA

compete to win the championship.

The market is a situation of diffused, impersonal competition among

sellers who compete to sell their goods and among buyers who use their

purchasing power to acquire the available goods in the market.

There are varying degrees of competition in the market depending on

the following factors:

⚫ Number and size of buyers and sellers

⚫ Similarity or type of product bought and sold

⚫ Degree of mobility of resources

⚫ Entry and exit of firms and input owners

⚫ Degree of knowledge of economic agents regarding prices, costs,

demand, and supply conditions