Galgotia Institute of Management &

Technology

Name: Mohd Nishatuzzama

Section:B
Roll No: 21GIMMBA020
 MARKET STRUCTURE
Market structure depicts how firms are differentiated and categorised based on the types of
goods they sell (homogeneous/heterogeneous) and how their operations are affected by external
factors and elements. Market structure makes it easier to understand the characteristics of diverse
markets.
The process by which price and output are determined in the real world is strongly affected by the structure of
the market
A market consists of all the potential buyers and sellers of a particular product
Market structure refers to the competitive environment in which the buyers and sellers of a product operate.
Four different types of market structure

1 Perfect competition
2 Monopoly
3 Monopolistic competition
4 Oligopoly
Perfect competition
Perfect competition refers to a type of market where there are many buyers and
seller that feature free barrier to entry dealing with homogeneous products with no
differentiation, where the price is fixed by the market. Individual firms are price
taker as the price is set by the industry as a whole.
Example: Agricultural products which have many buyers and sellers, selling
homogeneous goods where the price is determined by the demand and supply of
the market and not individual firms
 Monopoly
Monopoly refers to the market situation where there is one seller and there is no
close substitute to the commodities sold by the seller. The seller has full control
over the supply of that commodity.
Since there is only one seller, so a monopoly firm and an industry are the same.
The firm is the price maker as they have control over the industry.
There are high barriers to entry.
For Example: BSES ,Indian railways
 Monopolistic competition
Monopolistic competition where there are many sellers, selling products that are closely related but differentiated from
one another (e.g. quality of products may differentiate) and hence they are not perfect substitutes

This market structure exists when there are multiple sellers who attempt to seem different from one another.

The most distinguished features of monopolistic competition which makes it a blending of competition and monopoly is
product differentiation.

Product differentiation refers to the actively created differences in products with respect to brand, trademark, design,
packing, colour, size, measurement, weight such that though the products are similar, they are not identical or in other
words the products are different but closely related.

Example: different types of soap

 Oligopoly
Oligopoly refers to market structure where only small number of firms operate together control the majority of
the market share. Firms are neither price takers or makers.
Firms tend to avoid price war by following price rigidity. They closely monitor the prices of their competitors
and change prices accordingly.
Oligopoly firms focus on quality and efficiency of their products to compete with other firms.
( Entry barriers, Small number of sellers, many buyers, products can be homogeneous or differentiated).
Example: Network providers

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THANK YOU