MARKET STRUCTURE

Refers to the competitive environment in

which buyers and sellers operate.
COMPETITION
Rivalry among various sellers in the
market.
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.
 PERFECT COMPETITION
 Perfect competition is where the sellers within a market
place do not have any distinct advantage over the other
sellers since they sell a homogeneous product at similar
prices.
 There are many buyers and sellers, and since the
products are very similar in nature there is little
competition as the buyer’s needs could be satisfied by
the products sold by any seller in the market place.
 PERFECT COMPETITION
 Perfectly competitive market places also
have very low barriers to entry;
 Prices are determined by the forces of
demand and supply and, therefore, all sellers
must conform to a similar price level.
 IMPERFECT COMPETITION
 Imperfect competition as the word suggests is a
market structure in which the conditions for
perfect competition are not satisfied.
 This refers to a number of extreme market
conditions including monopoly, oligopoly,
monopsony, oligopsony and monopolistic
competition.
 IMPERFECT COMPETITION
 Oligopoly refers to a market structure in which a small number of sellers
compete with each other and offer a similar product to a large number of
buyers.
 A monopoly is where one firm will control the entire market place, and will
hold 100% market share
 Monopsony is where there are many sellers in the market with just one
buyer
 oligopsony is where there are a large number of sellers and a small
number of buyers.
 Monopolistic competition is where 2 firms within a market place sell
differentiated products that cannot be used as substitutes to each other.