Market: A market is a place, institution, or mechanism that brings together buyers and sellers of a particular good or service. Of course market is trading place of different products of which people demand as per their needs. Market is platform consumers/ buyers and sellers come face to face and do bargain for specific goods whatever consumer wants to purchase and seller/ shopkeeper want to sell.
Market system is a mechanism where all the product and resource markets of a market economy and the relationships among them are found. It is a method that allows the prices to be determined in those markets to allocate the economy’s scarce resources and to communicate and coordinate the decisions made by consumers, firms, and resource suppliers.
Market Structure is the formation of a market on the basis of interrelated characteristics of a market. Those characteristics are the number of buyers, their choices, preferences, purchasing capacity, strengths, product differentiation, product competition, easy entry and exit from the market.
There are four types of market.
Perfect Competition: Perfect competition is also called pure competition. It is a market structure in which a very large number of firms sell a homogeneous product, into which entry and exit is very easy. In this market structure, the individual seller does not have control over the product price, and also there is no non price competition. This market is characterized by a very large number of buyers and sellers. A single seller cannot influence the whole market, if he wants to increase or decrease the price of a product, other sellers present in market may get benefit of it.
Monopoly: It is also called pure monopoly. It is a market structure in which one firm possesses control over the market. It is a market of single seller, who sells a unique product. Hence easy entry or exit is not valid here. That single seller has complete control over price determination and production of that single/ unique product. Therefore, no non price competition may or may not found in this market structure. A monopolist earns maximum profits because of its unified availability with a unique product.
Monopolistic Competition: It is a market structure where many firms sell a differentiated product, into which entry is relatively easy. Under this market structure, firms do have somehow control over their product price. This market structure offers a considerable non price competition.
Oligopoly: oligopoly is market structure in which a few number of firms sell either a homogeneous or differentiated products. Under this structure, entry to market is not easy. But, this market structure does not offer a firm to have complete control over product price, it is somehow limited. A kind of mutual interdependence is found in this market. All decisions are taken mutually with cooperation by all members of oligopoly’s market structure. It is a kind of association or group of firms’ owners who have formed a board to influence the market by taking decisions jointly.
Written by: Paid Directory List