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Market Structure

The document discusses different market structures including pure competition, monopolistic competition, oligopoly, and monopoly. It provides characteristics and examples of each structure, such as how pure competition has many buyers and sellers of identical products, while oligopoly has few dominant sellers influencing the market.

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Shaira Iwayan
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24 views

Market Structure

The document discusses different market structures including pure competition, monopolistic competition, oligopoly, and monopoly. It provides characteristics and examples of each structure, such as how pure competition has many buyers and sellers of identical products, while oligopoly has few dominant sellers influencing the market.

Uploaded by

Shaira Iwayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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MARKET STRUCTURES AND COMPETITION

Market Structure
o The nature and degree of competition among firms
operating in the same industry.
o Markets are classified according to certain structural
characteristics
o Pure Competition, Monopolistic Competition,
Oligopoly and Monopoly
PURE COMPETITION

 A large number of buyers and sellers exist.


- No single buyer or seller can affect price.
 Buyers and sellers deal in identical product.
 Each buyer and seller acts independently – competition keeps
price low
 Buyers and sellers are reasonably well informed about items
for sale
 Buyers and sellers are free to enter into, conduct or get out
of business
MONOPOLISTIC COMPETITION
 Has all the characteristics of pure competition except the fact that the
products sold are not identical.
Non-price competition
o Advertisements try to convince consumers that the product is somehow
better than the other brand.
o Heavy advertisement and promotion from those types of companies.
Profit maximization
 There is still price competition so you can not raise your price too high
 Producers will maximize profits by using the market price for their
product as a guide to decide how many will be produced and sold.
OLIGOPOLY
 Market structure in which very few large sellers of a product
dominate.
 Product can be identified.
 Due to few number of firms, one firm can cause a change in
output, sales and price in the industry as a whole.
 Because there are so few firms, whenever one firm does
something, the other firms usually follows.
MONOPOLISTIC

 Exactly opposite of pure competition.


 Market structure in which there is only one seller of a
particular products with no close substitute.
 No pure monopolistic exist but some firms come close.
TYPES OF MONOPOLIES are “price makers” rather the “price takers”

o Natural Monopolies
-A situation in which costs are minimized by having a single
firm produce the product.
-The nature of the industry dictates that society would better
served by only one supplier
o Geographic Monopolies
- A monopoly exist because no other business in the
immediate area offers any competition.
o Technological Monopolies
- A firm or individual has discovered a new manufacturing
technique or has invented or create something entirely new.

o Government Monopolies
- A business own’s and operates by the government

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