What Are The Features Of Market Structures

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In the real world, firms operate in a large variety of environments based on different market conditions. In order to analyze this real life behavior, economists have identified characteristics that make some firms similar to each other and other firms different from one another.

The most important features of market structures are:
 The number of firms
 The market share of the largest firms
 The nature of costs
 The degree to which the industry is vertically integrated
 The extent of product differentiation
 The structure of buyers in the industry
 The turnover of customers

The study of firms is based on the following categories of market structure: monopolistic competition, oligopoly and duopoly. The characteristics of each market structure relate to differences in the demand curves faced by firms in each category.
Monopolistic competition is a type of imperfect competition such that many producers sell products that are differentiated from another (e.g. by branding or quality) and hence are not perfect substitutes.
Oligopoly is a type in which a market is run by a small number of firms that together control the majority of the market share.
Duopoly is a special case of an oligopoly with two firms. Perfect competition (cannot be found in real life) is the market structure that maximizes efficiency, as determined by total surplus.
Market structure is the comprehensive box that relates to the rules of engagement for all market participants.
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