Market structure in economics

Market In the ordinary language the term market means a particular place where buyers and sellers meet each other and buy and sell the commodities. On the otherhand in terms of economics the term market doesnot mean any particular place but it means the entire area where buyers and sellers of a commodity are in such close contact with each other that price of the same commodity tends to be one throughout that area.

Definations According to cournot “ economists understand by the term market not any particular market place in which things are brought and sold but the whole of any region in which buyers and sellers are in such free intercourse with each other that price of same good tends to equality easily and quickly.”

Features  Area  One commodity  Free copetition  Buyers and sellers

Main forms of market structure  Perfect competition market  Imperfect competition a)monopolistic competition market b)oligopoly market  Monopoly market

Perfect competition Perfect competition is a market in which there are many firms selling identical products with no firm large enough relative to the entire market to be able to influence market price

Features  Large numbers of buyers and sellers  Homogeneous product  Free entry and exit of firms  Independent decision making  Same selling cost

Monopoly market According to boumol “ a pure monopoly is defined as the firm that is also an industry it is the only supplies of some particular commodity for which there exists no close substitute

Features 1)One seller and large no. of buyers 2)Monopoly is an industry 3)Restrictions on the entry of the new firms 4)No close substitutes 5) Price maker 6) Price discrimination 7) Different average and marginal revenue curve

Monopolistic competition market “Monopolistic competition found in the industry where there is a large number of small sellers,selling differentiated but close substitutes”

Features Large number of firm and buyers Product differentition Freedom pf entry and exit of firms Selling cost AR and MR curves Price policy

Oligopoly market An oligopoly is a market ehere there are few producers of a product. e.g there are only few firms in india, manufacturing cars

Features ofew sellers oInter dependence oSelling costs oGroup behaviour oUncertainity of demand curve

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