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MARKET STRUCTURE

MEANING

Structure refers to something that organization and dimension.

And the market structure refers to the size and design of the market. It also include the manner of the operation of the market.

DEFINITION

Market structure refers to those organizational characteristics of a market which influence the nature of competition and pricing, and affect the conduct of business firms.

Market structure refers to those characteristics of the market which affect the traders behaviour and their performance.

COMPONENTS OF MARKET STRUCTURE

CONCENTRATION OF MARKET POWER

DEGREE OF PRODUCT DIFFERENTIATION

CONDITIONS FOR ENTRY OF FIRMS IN THE MARKET

FLOW OF MARKET INFORMATION

DEGREE OF INTEGRATION

It is an important element determining the nature of competition and consequently of market conduct and performance.

It is measured by the number and size of firms existing in the market.

Restricts the movement of goods between buyers and sellers at fair and competitive prices.

Creates an oligopoly or oligopsony situation in the market.

DEGREE OF PRODUCT DIFFERENTIATION

Products are homogeneous, the price variation in the market will not be wide.

When the products are heterogeneous , firms have the tendency to charge different prices for their products.

CONDITIONS FOR ENTRY OF FIRMS IN THE MARKET

Restrictions

Big firms do not allow new firms to enter the market or make their entry difficult by their dominance in the market.

Government restrictions on entry of new firms

FLOW OF MARKET INFORMATION

The buyers and sellers to freely interact with one another in arriving at prices and striking deals.

DEGREE OF INTEGRATION

The behaviour of an integrated market will be different from that of a market where there is no or less integration either among the firms or of their activities.

DYNAMICS OF MARKET STRUCTURE

MARKET CONDUCT

Behaviour of firms, specially in relation to pricing and their practices in adapting and adjusting to the market in which they function.

Market sharing and price setting policies

Policies aimed at coercing rivals

Policies towards setting the quality of products

MARKET PERFORMANCE

The economic result that flow from the industry as each firm pursues its particular line of conduct.

Performance and efficiency of the market structure are :

Use of resources

Monopoly or monopoly profits

Size and the number of the firms

Market structure

monopomonopoly

Monopolistic competition

Perfect competition

Oligopoly

Natural monopoly

Geographical monopoly

Government monopoly

Technological monopoly

Differentiated oligopoly

Pure oligopoly

CHARECTERISTICS OF THE MARKET STRUCTURE

PERFECT COMPETITION

MONOPOLISTIC COMPETITION

OLIGOPOLY

MONOPOLY

COMPETITION AND MARKET STRUCTURE

More competition

Less competition

MONOPOLISTIC COMPETITION

OLIGOPOLY

MONOPOLY

Least control over price

CLASSIFICATION OF MARKET STRUCTURE

Marketing structure should change

Production pattern

Cost and pattern of marketing functions

Demand pattern

Technological change in industry