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Market Structures

Market structure refers to the organization of a market based on competition, number of firms, consumer bargaining power, and barriers to entry. There are four main types of market structures: monopoly, oligopoly, monopolistic competition, and perfect competition, each with distinct characteristics and examples. Understanding market structures is essential for entrepreneurs and citizens as it influences market dynamics and business strategies.

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10 views26 pages

Market Structures

Market structure refers to the organization of a market based on competition, number of firms, consumer bargaining power, and barriers to entry. There are four main types of market structures: monopoly, oligopoly, monopolistic competition, and perfect competition, each with distinct characteristics and examples. Understanding market structures is essential for entrepreneurs and citizens as it influences market dynamics and business strategies.

Uploaded by

diane.paloma27
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Market

Structures
Three questions for this topic:

● What is market structure?

● What are the different


market structures (definitions,
examples, comparisons)?

● Why do
entrepreneurs/citizens have
to know market structures?
Market Structure is classified based
on the following aspects:

1. DEGREE OF
COMPETITION
2. NUMBER OF FIRMS
3. BARGAINING POWER OF
CONSUMERS
4. BARRIER TO ENTRY
1. DEGREE OF
COMPETITION
• driven by the number of
competing firms in the
industry
• the higher the number of
firms, the greater the
degree of competition
2. NUMBER OF FIRMS

• pertains to the actual


number of firms
3. BARGAINING POWER OF
CONSUMERS

• refers to the ability of


consumers to influence
market price
• high bargaining power =
consumers are price makers
• low or no bargaining power =
consumers are price takers
4. BARRIER TO ENTRY

• refers to the ease with


which new firms can
penetrate the industry
• high setup costs
• exclusivity of resource
#1
MONOPOLY
A monopoly is a
firm that is the
sole seller of a
product without
close substitutes.
Monopolies exist because
of a barrier to entry
which may come in the
form of:

A. Monopoly resources
B. Government
regulation
C. Production Process
A. A firm may have
exclusive ownership to
a key resource in
production, thus a
barrier to entry.

Example: Google
B. A firm may be
granted the exclusive
right by the government
to sell a good/service.

Example:
*patents/copyrights
*CASURECO II
#2
OLIGOPOLY
An oligopoly is a
market structure in
which only a few sellers
offer similar or
identical products.

Example: internet
providers/petroleum
companies
A duopoly is a
variation of an
oligopoly, where
there are only 2
sellers.
An oligopoly may
exist because of
high barriers to
entry.

e.g. capital needed


#3
MONOPOLISTIC
COMPETITION
A monopolistic
competition is a
market structure in
which many firms
sell products that
are similar but not
identical.
These characteristics can
be summarized into:

a. Many sellers
b. Product
differentiation
c. Free entry and
exit
Examples of
markets:
Books, food,
clothing,
restaurants
#4 PERFECT
COMPETITION
A competitive
market / perfectly
competitive market
is a market with
many buyers and
sellers trading
identical products.
These characteristics can be
summarized into:

a. Many buyers and


sellers
b. Goods offered are
largely the same
c. Firms can freely enter
or exit the market
CONCLUSION:

Market structures give


entrepreneurs an insight
to the competitiveness of
the market they will
enter.

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