MARKET STRUCTURE
 What is a Market?
• Place where there are many buyers and sellers
actively engaged in buying and selling acts.
Contact through different means of communication
like internet, telephone etc.
• Thus, It does not mean a particular place but the
entire area where buyers and sellers of a
commodity are in close
contact
and
they have one price of
same
commodity.
WHAT IS MARKET STRUCTURE?

It is therefore understood as those characteristics
of a market that influence the behavior and results
of the firms working in that market.

According to J.C. Edwards, “ A market is that
mechanism
by which buyers and sellers are
bought together. It is not
place.”
necessarily a fixed
•
Perfect Competition
•
Monopoly
•
Monopolistic Competition
•
Oligopoly
•
It is such a market structure where there are
large numbers of sellers and buyer producing
Homogeneous product at the price of
the
product which is
the
determined
by
industry.
•
One price prevails in the market and all the
firms sell the product at the prevailing price
(which means price is fixed).
•
Fixed Price for a single seller
Very Large number of sellers
•
Homogeneous product
•
No barriers to entry
•
Perfect knowledge of the market
•
Profit Maximization objective
•
Example: Agriculture Market
•
It is a market structure in which there
is only a single seller of the product .
•
One firm has full control over the
supply and price of the product .
•
Example : WAPDA
•
Monopolist is price maker
•
Unique Product
•
No close substitutes
•
Sole supplier of the product
•
Large number of buyers
•
One firm industry
•
Blocked entry
•
It is a mid-way
between
perfect
competition and monopoly .
•
A type of market where large number of small
sellers are selling differentiated products with
some control over price.
•
Large number of small firms
•
Product differentiation
•
Freedom of entry and exit
•
Non price competition
•
Availability of Close substitutes
•
Some Control over price
•
Example:
All type of Retailors (Like Boutiques , Shoe Market
etc)
•
•
It is a market structure in which there are
few sellers of a product selling identical or
differentiated products with price decision
on collusion basis.
•
If they are selling identical products, it’s a
case of Pure Oligopoly.
•
If they are selling differentiated products,
it’s a case of Differentiated Oligopoly .
•
Relatively small number of Large sellers
•
Interdependence of the firms
•
Price rigidity and price war
•
Difficulty in entry and exit
•
Collective price decision of all sellers
•
Examples: Pakistan Telecommunication Authority
•
OPEC (Oil Petroleum Exporting Countries ) etc.
MONOPSONY
A monopsony is a market condition in which
there is only one buyer.
 Because there is only one buyer for a good or
service, the buyer sets the demand, and
therefore, controls the price.

DUOPOLY

A situation in which exactly two
suppliers dominate the market for a commodity or
service.
???????????
Question