 The concept of market structure simply relates to how much market power or control a particular firm has in affecting the level of market prices.

 There are basically 4 market structures in an open economy in
Economics.

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Definition: Pure competition exists when there are many buyers and rival sellers competing strongly. Pure competition implies that firms are price takers, potential competitors can easily enter and exit the market, there is perfect knowledge of relevant conditions in the market by buyers and sellers to allow them to make rational decisions and so on.
Features of a purely competitive or perfectly competitive market:
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Many sellers in the industry
Strong competition
No product differentiation
Ease of entry and exit
Firms are ‘price takers’ and have little market power.

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Definition: Monopolistic competition is a market where there are
many firms producing products that are in some way differentiated from each other.
Features of monopolistic competition market:
 Many sellers in the industry
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Some product differentiation
Moderate ease of entry and exit
How do they compete and get you to buy their products?
 Advertisement – techniques, spread knowledge of products, imply a need for the product.
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Distribution channels – flood the market
Customer loyalty programs
Build up a reputation of higher quality.

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Definition: Oligopoly exists where several large firms (2 – 5) control the output of a product for which there is no close substitute. A market with only 2 main firms is known as a dupopoly.
Features of an oligopoly market:
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Several sellers in the industry
Some product differentiation
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Fairly difficult entry and exit – substantial barriers to entry
Collusion may exist in the market with firms deciding to act together rather than engage in genuine competition.

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Definition: Pure monopoly exists when a single firm controls the output of a particular market. That firm is a price maker and competition is weak.
Features of an pure monopoly market:
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One seller in the industry
Weak competition
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Product differentiation unimportant
Entry and exit difficult
Firm is a ‘price maker’ and has a lot of market power.
Examples: