Types of Markets

What is Market
• A place where buyer and seller meet
• In economics, it means entire area where
buyers and seller are in close contact and the
price of same commodity tends to be one
throughout that area
• Contact types: telephone, email, internet,
letters etc
• It does not refer to any geographical area
 Market & Market Structure

• Market : Any arrangement that enables

buyers and sellers to contact for
transactions.
• Features
1.Commodity
2.Competition
3.Area
4.Existence of buyer and seller
 Classification of market
• On the basis of area
International and national, local
• On the basis of time
Market period
Short period
Long run
Spot market
Future market
• On the basis of regulation
• On the basis of volume- Wholesale, retail
• On the basis of competition
 Perfectly competitive market
• Large number of producers producing
homogeneous product
• Both buyer and seller are aware of price
• No individual firm can influence the price of
product
• Large number of buyers
• Free entry and exit
• Vegetable market, food grain market
 Monopoly
• Single seller and large number of buyers
• No close substitute
• Barriers on the entry of new firm
• Producer is price maker
• Railways, Water supply
 Imperfect competition
• Large number of buyers and sellers
• Each producer produces different product
which are close substitute of each other but
not same
• Cannot influence the market price
• No firm can affect the sale of other firm
• Free entry and exit of firm
 Oligopoly
• Few sellers of commodity
• Each seller control a big portion of total supply
• Each seller can influence its Price output
• Each firm is producing homogenous or slightly
differentiated product
• There is interdependence of firms
• Large number of consumers
• Cold drinks, pharmaceutical products
 Duopoly
• Only two producers
• Fixing the price: Depend upon the relation
between two
 Main Objectives of a Business Firm
• Profit maximisation
• Sales maximisation
• Increased market share/market dominance
• Social/environmental concerns
• Controlling cost
• Optimum utilisation of the scarce resources
• Social objectives