Analysis of Market Structures

Market structure is the physical characteristics of the market within which companies react. This means that there are different kinds of market structure based on how companies work together within a particular industry. Location and product have the most to do with determining the market structure. There are four defined market types. The first market structure is called the perfectly competitive market. The second market is called a monopoly market structure. The third market is called monopolistic competition market structure. The final market is called oligopoly market structure. Each market structure is different and both benefits and disadvantages

The organization and characteristics of a specific market where a company operates is referred to as market structure. While markets can basically be classified by their degree of competitiveness and pricing, there are four types of markets i.e. perfect competition, monopolistic competition, monopoly, and oligopoly. In perfect competition markets, many firms are price takers whereas monopolistic competition markets are characterized by the ability of some firms to have market power. In contrast, oligopoly markets are those in which few firms can be price makers while monopoly market is where one firm can be a price maker.

Perfect competition is an idealised market structure theory used in economics to show the market under a high degree of competition given certain conditions. This essay aims to outline the assumptions and distinctive features that form the perfectly competitive model and how this model can be used to explain short term and long term behaviour of a perfectly competitive firm aiming to maximise profits and the implications of enhancing these profits further.

In this scenario, the Tapese people of the island of Tap are being exposed to two market structures, perfect competition and a monopoly. A perfectly competitive market is a hypothetical market where competition is at its greatest possible level and some key characteristics of a perfectly competitive market are, many buyers and sellers, a homogeneous product, which is one that cannot be distinguished from competing products from different suppliers. In other words, the product has essentially the same physical characteristics and quality as similar products from other suppliers. Furthermore, a perfectly competitive market has perfect information, they are price takers, and there are no barriers to entry. With perfect information in a market,

Generally, a perfectly competitive market exists when every participant is a "price taker", and no participant influences the price of the product it buys or sells. Specific characteristics may

In the traditional market, consumers decide how much to consume and suppliers decide how much to supply and prices coordinate the decisions. For perfect competition it is assumed inter alia that there is: perfect information so that individuals are fully informed about prices, qualities etc; a lot of buyers and sellers; no single buyer or seller that has influence on the price.

Perfect competition is a type of market structre where there is highest level of competition. In perfect competition the firms are offering homogeneous product. Every firm believe that it can sell any amount of output it wishes at the prevailing market price. Because of homogenous product and large number of firms, no individual firm is in a position to effect the price of the product and therefore the demand curve for the firm under perfect competition is a horizontal straight line.

(P3.1) Market structure is the organizational and other characteristics of a market. It plays an important role in determining the price and production. There are five types of market structures:

The theory of pure competition is a theory that is built on four assumptions: (1.)There are many sellers and many buyers, none of which is large in relation to total sales or purchases. (2.) Each firm produces and sells a homogeneous product. (3.) Buyers and sellers have all relevant information about prices, product quality, sources of supply, and so forth. (4.) Firms have easy entry and exit.

Each firm acts independently and has a limited share of the market. So, and individual firm has limited control over the market price while large number of firms leads to competition in the market. Despite of large number of sellers, each firm is in position to exercise some degree of monopoly through product differentiation. Product differentiation refers to the products on the basis of brand, size, color, shape and etc. The product of a the firm is close but not perfect a perfect substitute for other firm. The implication of “ Product Differentiation” is that buyers of a product will differentiate between the same products produced by different firms. So, they are willing to pay different prices for the same product produced by different firms. This gives some monopoly power to an individual firm to affect market price of its product. Under monopolistic competition, products are differentiated and these differences are made known to buyers through selling costs. Selling costs is the expenses incurred on marketing, sales promotion and advertisement of the product. This is to persuade the buyers to buy a particular brand of the product in preference to competitor’s brand. Because of this, selling costs constitute a substantial part of the total cost under monopolistic competition. So, under monopoly, selling costs are of small amount as the firm does not face

Competitive markets means strong rivalry amongst firms or companies which are trying to achieve and outdo each others by increasing their market share, profits and sales by using the methods of marketing mix which includes prices, products, distributions and promotions. It can also be described as a spectrum of a purely monopolistic, in which a company is the sole producer of good and services, this means that a sufficient number of firms or companies are relatively equal to their sizes, which eventually none of the big competitive companies can influence the market in any way.

A perfect competing market is a hypothetical market where competition is at its greatest possible level. Neoclassical economists argued that perfect competitive would produce the best possible outcomes for consumers, and society. The best market to have a business grow and develop in, would be a prefect competing market. There are many key characteristics of perfectly competitive markets to

In perfect competition, there are no legal, social or technological barriers to the entry or exit of the market. This allows freedom to enter and exit, with no worry of added costs in the long-term.

The competitive equilibrium emphasizes that a perfect competition has four common characteristics. The first characteristic of a perfection competition is when a large number of firms produces goods or service for a market that has a large amount of consumer. The second characteristic of a perfect competition is that there are no barriers for new firms to enter the markets at any time. The third characteristic of a perfect competition is all of the firms in the market sell produces that are identical in nature. The fourth characteristic of perfect competition is that all firms and consumers are price takers (). This means that the firms will have product for sale at a certain price, and the consumer will have no problem purchasing the product at that price. Consumers do not influence the prices at all in a perfect competition.

This is a market structure which is characterized with numerous firms that are almost equal in strength and none can therefore influence that price that the said market structure. This means that in this market structure the price of products is determined by normal market forces such as demand and supply (Morris & Morris, 1990). A perfect competition market therefore has the following characteristics; a large number of firms that have equal power. Another characteristic of perfectly competitive markets is that there are no barriers of entry or exit. Third, the firms are likely to trade in the same variety of products and the only competition is competition based. When it comes to the prices in this market structure, both companies and the consumers are both price takes and since none of them can determine the price of a