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Lecture 25 - Market Structure

This document discusses different types of market structures: perfect competition, monopoly, oligopoly, and monopolistic competition. Perfect competition is characterized by many small firms and homogeneous products. Monopoly refers to a single seller that is the sole provider of a product and can control price and output. Oligopoly describes a market with a small number of large firms. Monopolistic competition involves many firms that differentiate similar products.

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21 views

Lecture 25 - Market Structure

This document discusses different types of market structures: perfect competition, monopoly, oligopoly, and monopolistic competition. Perfect competition is characterized by many small firms and homogeneous products. Monopoly refers to a single seller that is the sole provider of a product and can control price and output. Oligopoly describes a market with a small number of large firms. Monopolistic competition involves many firms that differentiate similar products.

Uploaded by

technical analysis
Copyright
© © All Rights Reserved
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Download as PDF, TXT or read online on Scribd
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MANAGERIAL ECONOMICS

THEORY AND APPLICATIONS

CHAPTER-13
MARKET MORPHOLOGY
Chapter 13
Market Morphology

Learning Objectives
After completing this chapter, the student
should be able to:
• Understand the economic concepts of market.
• Classify markets.
• Distinguish between product market and factor
market.
• Explain the basic characteristics of perfectly
competitive market.
• Understand the key feature of monopoly and
the types of monopoly firms.
• Know the reality of imperfect competition.
Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

Different Types of Market Structures

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

• Market Structure
It refers to the economically significant feature of a
market that causes an impact on the business
behaviour of the fir-ms.
• Perfect Competition
It refers to the market structure characterized by
many firms to compete in producing identical goods
and the market-en-try is free no market-barriers.

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

1. Conditions or Characteristics of Perfect Competition


• Large number of sellers.
• Large number of buyers.
• Product homogeneity.
• Free entry and exit of firms.
• Perfect knowledge of market conditions
• Perfect mobility of factors of production.
• Government non-intervention.
• Absence of transport costs element.

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

• Monopoly
It refers to the market structure in which there is only a single
producer or supplier of a product and the entire market supply is
in his control. Monopoly is antithesis of competition.
• Features of Monopoly
• There exists only one seller but there are many buyers.
• The monopoly firm is the industry.
• There are many entry barriers such as natural, economic,
technological or legal, which do not allow competitors to enter
the market. The monopolist has, therefore, complete hold over
the market supply and price determination.

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

• A monopoly firm is a “price-maker.” In a monopoly market,


the price is solely determined at the discretion of the
monopolist, since he has control over the market supply.
• There are no closely competitive substitutes for the product
of the monopolist. So the buyers have no alternative or
choice. They have to either buy the product from the
monopolist or go without it.
• Monopoly is a complete negation of competition.
• Since a monopolist has a complete control over the market
supply in the absence of a close or remote substitute for his
product, he can fix the price as well as quantity of output to
be sold in the market. Though a monopolist is a price-maker,
he has no unlimited power to charge a high price for his
product in the market.

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani
Chapter 13
Market Morphology

• Oligopoly
It refers to the market structure comprised by a few
producers or suppliers.
• Monopolistic Competition
It refers to the market structure characterised by
product differentiation of many monopolistically
competitive firms in a particular line of production.

Managerial Economics
Himalaya Publishing House Theory and Applications
Dr. D. M. Mithani

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