The term “ market” refers to a place where sellers and buyers meet and facilitate the selling and

buying
of goods and services. But in economics, it is much wider than just a place, It is a gamut of all the buyers
and sellers, who are spread out to perform the marketing activities.

Market structure refers to the way that various industries are classified and differentiated in accordance
with their degree and nature of competition for products and services. It consists of four types: perfect
competition, oligopolistic markets, monopolistic markets, and monopolistic competition.
refers to the characteristics of the market either organizational or competitive, that
describes the nature of competition and the pricing policy followed in the market.

The Perfect Competition is a market structure where a large number of buyers and sellers are present,
and all are engaged in the buying and selling of the homogeneous products at a single price prevailing in
the market.

Perfect Competition
The Perfect Competition is a market structure where a large number of buyers and sellers are present,
and all are engaged in the buying and selling of the homogeneous products at a single price prevailing in
the market.
In other words, perfect competition also referred to as a pure competition, exists when there is no
direct competition between the rivals and all sell identically the same products at a single price.
Features of Perfect Competition
1. Large number of buyers and sellers: In perfect competition, the buyers and sellers are large
enough, that no individual can influence the price and the output of the industry. An individual
customer cannot influence the price of the product, as he is too small in relation to the whole
market. Similarly, a single seller cannot influence the levels of output, who is too small in
relation to the gamut of sellers operating in the market.
2. Homogeneous Product: Each competing firm offers the homogeneous product, such that no
individual has a preference for a particular seller over the others. Salt, wheat, coal, etc. are some
of the homogeneous products for which customers are indifferent and buy these from the one
who charges a less price. Thus, an increase in the price would let the customer go to some other
supplier.
3. Free Entry and Exit: Under the perfect competition, the firms are free to enter or exit the
industry. This implies, If a firm suffers from a huge loss due to the intense competition in the
industry, then it is free to leave that industry and begin its business operations in any of the
industry, it wants. Thus, there is no restriction on the mobility of sellers.
4. Perfect knowledge of prices and technology: This implies, that both the buyers and sellers have
complete knowledge of the market conditions such as the prices of products and the latest
technology being used to produce it. Hence, they can buy or sell the products anywhere and
anytime they want.
5. No transportation cost: There is an absence of transportation cost, i.e. incurred in carrying the
goods from one market to another. This is an essential condition of the perfect competition
since the homogeneous product should have the same price across the market and if the
transportation cost is added to it, then the prices may differ.
6. Absence of Government and Artificial Restrictions: Under the perfect competition, both the
buyers and sellers are free to buy and sell the goods and services. This means any customer can
buy from any seller, and any seller can sell to any buyer.Thus, no restriction is imposed on either
party. Also, the prices are liable to change freely as per the demand-supply conditions. In such a
 situation, no big producer and the government can intervene and control the demand, supply or
price of the goods and services.
Example: A street populated with many grocers, all selling the same products, is a perfect competition
market. If an entrepreneur wants to start a new grocery store on this street, they might find it difficult to
differentiate from local competitors because they also want to sell the same products. This can lead to
low profits, but when the grocery store owner raises prices to increase profits, they may sell fewer
products because customers shop elsewhere. The price increases or reductions may also have little to
no impact on the market.

the Monopolistic Competition, there are a large number of firms that produce differentiated products
which are close substitutes for each other. In other words, large sellers selling the products that are
similar, but not identical and compete with each other on other factors besides price.

Monopolistic Competition
Monopolistic Competition, there are a large number of firms that produce differentiated products
which are close substitutes for each other. In other words, large sellers selling the products that are
similar, but not identical and compete with each other on other factors besides price.
a type of market structure where many companies are present in an industry,
and they produce similar but differentiated products. None of the companies enjoy a monopoly, and
each company operates independently without regard to the actions of other companies.
Features of Monopolistic Competition

1. Product Differentiation: This is one of the major features of the firms operating under the
monopolistic competition, that produces the product which is not identical but is slightly
different from each other. The products being slightly different from each other remain close
substitutes of each other and hence cannot be priced very differently from each other.
2. Large number of firms: A large number of firms operate under the monopolistic competition,
and there is a stiff competition between the existing firms. Unlike the perfect competition, the
firms produce the differentiated products which are substitutes for each other, thus make the
competition among the firms a real and a tough one.
3. Free Entry and Exit: With an intense competition among the firms, the entity incurring the loss
can move out of the industry at any time it wants. Similarly, the new firms can enter into the
industry freely, provided it comes up with the unique feature and different variety of products
to outstand in the market and meet with the competition already existing in the industry.
4. Some control over price: Since, the products are close substitutes for each other, if a firm
lowers the price of its product, then the customers of other products will switch over to it.
Conversely, with the increase in the price of the product, it will lose its customers to others.
Thus, under the monopolistic competition, an individual firm is not a price taker but has some
influence over the price of its product.
5. Heavy expenditure on Advertisement and other Selling Costs: Under the monopolistic
competition, the firms incur a huge cost on advertisements and other selling costs to promote
the sale of their products. Since the products are different and are close substitutes for each
other; the firms need to undertake the promotional activities to capture a larger market share.
6. Product Variation: Under the monopolistic competition, there is a variation in the products
offered by several firms. To meet the needs of the customers, each firm tries to adjust its
product accordingly. The changes could be in the form of new design, better quality, new
packages or container, better materials, etc. Thus, the amount of product a firm is selling in the
 market depends on the uniqueness of its product and the extent to which it differs from the
other products.
Example ; The Fast Food companies like the McDonald's and Burger King which sells burger in the
market are the most common type of example of monopolistic competition. The two companies
mentioned above sell an almost similar type of products but are not the substitute of each other.
Fast food restaurants, hotels, gas stations, clothing stores, medical practices, legal firms, and
hair salons are several industries that are monopolistically competitive, assuming they locate in areas
with other companies that serve the same clientele.

Oligopoly Market characterized by few sellers, selling the homogeneous or differentiated products. In
other words, the Oligopoly market structure lies between the pure monopoly and monopolistic
competition, where few sellers dominate the market and have control over the price of the product.
a state of limited competition, in which a market is shared by a small number of
producers or sellers.

Oligopoly Market
Definition: The Oligopoly Market characterized by few sellers, selling the homogeneous or
differentiated products. In other words, the Oligopoly market structure lies between the pure monopoly
and monopolistic competition, where few sellers dominate the market and have control over the price
of the product.
Under the Oligopoly market, a firm either produces:
 Homogeneous product: The firms producing the homogeneous products are called as Pure or
Perfect Oligopoly. It is found in the producers of industrial products such as aluminum, copper,
steel, zinc, iron, etc.
 Heterogeneous Product: The firms producing the heterogeneous products are called as
Imperfect or Differentiated Oligopoly. Such type of Oligopoly is found in the producers of
consumer goods such as automobiles, soaps, detergents, television, refrigerators, etc.
Features of Oligopoly Market
1. Few Sellers: Under the Oligopoly market, the sellers are few, and the customers are many. Few
firms dominating the market enjoys a considerable control over the price of the product.
2. Interdependence: it is one of the most important features of an Oligopoly market, wherein, the
seller has to be cautious with respect to any action taken by the competing firms. Since there
are few sellers in the market, if any firm makes the change in the price or promotional scheme,
all other firms in the industry have to comply with it, to remain in the competition.
Thus, every firm remains alert to the actions of others and plan their counterattack beforehand, to
escape the turmoil. Hence, there is a complete interdependence among the sellers with respect to their
price-output policies.
3. Advertising: Under Oligopoly market, every firm advertises their products on a frequent basis,
with the intention to reach more and more customers and increase their customer base.This is
due to the advertising that makes the competition intense.
If any firm does a lot of advertisement while the other remained silent, then he will observe that his
customers are going to that firm who is continuously promoting its product. Thus, in order to be in the
race, each firm spends lots of money on advertisement activities.
4. Competition: It is genuine that with a few players in the market, there will be an intense
competition among the sellers. Any move taken by the firm will have a considerable impact on
its rivals. Thus, every seller keeps an eye over its rival and be ready with the counterattack.
 5. Entry and Exit Barriers: The firms can easily exit the industry whenever it wants, but has to face
certain barriers to entering into it. These barriers could be Government license, Patent, large
firm’s economies of scale, high capital requirement, complex technology, etc. Also, sometimes
the government regulations favor the existing large firms, thereby acting as a barrier for the new
entrants.
6. Lack of Uniformity: There is a lack of uniformity among the firms in terms of their size, some are
big, and some are small.
Examples of oligopoly abound and include the auto industry, cable television, and commercial air
travel. Some examples of oligopolies include the car industry, petrol retail, pharmaceutical industry,
coffee shop retail, and airlines. In each of these industries, a few large companies dominate.

Monopoly is a market structure characterized by a single seller, selling the unique product with the
restriction for a new firm to enter the market. Simply, monopoly is a form of market where there is a
single seller selling a particular commodity for which there are no close substitutes.
Features of Monopoly Market

1. Under monopoly, the firm has full control over the supply of a product. The elasticity of demand
is zero for the products.
2. There is a single seller or a producer of a particular product, and there is no difference between
the firm and the industry. The firm is itself an industry.
3. The firms can influence the price of a product and hence, these are price makers, not the price
takers.
4. There are barriers for the new entrants.
5. The demand curve under monopoly market is downward sloping, which means the firm can
earn more profits only by increasing the sales which are possible by decreasing the price of a
product.
6. There are no close substitutes for a monopolist’s product.