MARKET STRUCTURE

SUBMITTED TO SUBMITTED BY

Prof. Gurpartap Singh Shaifali Verma

MBA-1 ‘B’

MARKET STRUCTURE

Market Structure refers to the size and number of Buyers and Sellers in the market for a good or service.

A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.

TYPES OF MARKET STRUCTURE

PERFECT COMPETITION

MONOPOLISTICCOMPETITION

MONOPOLY

OLIGOPOLY

1. PERFECT COMPETITION

FEATURES

I. Large number of Buyers and Sellers.

II. Products are perfect substitutes of each other ( HOMOGENEOUS PRODUCTS)

III. Free entry and exit of firms.

IV. Perfect knowledge about the Market.

V. No Government intervention.

EXAMPLES OF PERFECT COMPETITION

STREET FOOD

FISH MARKET

VEGETABLE MARKET

2.MONOPOLY

FEATURES

i. One seller and large number of buyers.

ii. Restrictions on the entry of New Firms.

iii. Firm is Price Maker.

iv. Products have no close substitutes.

EXAMPLES OF MONOPOLY

Indian Railways has Monopoly in

Rail Transportation.

Hindustan Aeronautics Limited has monopoly over production of Aircraft.

There is Government monopoly over production of Nuclear power.

Eatables inside a Theatre during a movie.

3.MONOPOLISTIC COMPETITION

FEATURES

i. Large number of Buyers and Sellers in the market.

ii. Product Differentiation.

iii. Free entry and exit of firms.

iv. Firm is a Price maker.

v. Imperfect Knowledge.

EXAMPLES OF MONOPOLITIC COMPETITION

Lux, Godrej, Hamam, Dove,etc, among Bathing soaps…..

(Here, Products are close, but not Perfect Substitute of each other)

4.OLIGOPOLY

A market structure in which few firms dominate the supply of an industry’s output and compete

with each other for markets.

OLIGOPOLYFEATURES

i. Industry dominated by small number of large firmsii. Many firms may make up the industryiii. High barriers to entryiv. Products could be highly differentiated – branding

or homogenous.v. High degree of interdependence between firms.vi. Collusion.

EXAMPLES OF OLIGOPOLY

CAR INDUSTRY

AIRLINE INDUSTRY

CIGARETTES

STEEL INDUSTRY

TELECOMMUNICATION

BASIS PERFECT COMPETITION

MONOPOLY MONOPOLISTIC COMPETITON

OLIGOPOLY

No.ofbuyers and sellers.

Large One seller,LargeBuyers

Large Few sellers,LargeBuyers

Product Homogeneous Homogeneous& Differentiated

Product Differentiation

Homogeneous& Differentiated

Price Uniform Not Uniform Not Uniform Not Uniform

Entry of Firms

Free Entry Not possible Not absolute Freedom

High Barriers

Knowledge of Market conditions

Perfect Knowledge Imperfect Knowledge

Imperfect Knowledge

Imperfect Knowledge

SellingCosts

Not Required Not Required Very significant Very Significant

THANK YOU