Market structure Perfect Competition Monopoly Oligopoly Monopolistic Competition

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Dr.M.Sathaiah, CAT, Theni

2. Market Structure
• The term structure refers to something that
has organization and dimension – shape, size
and design; and which is evolved for the
purpose of performing a function.
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Dr.M.Sathaiah, CAT, Theni

3. Components of Market Structure
• Sellers (Producer)
• Buyers (Customers)
• Nature of product (Types of Product)
• Conditions of entry and exit
• Negotiation (Price)
• Transfer of Ownership and Product
• Transfer of Money or Equal Value
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Dr.M.Sathaiah, CAT, Theni

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Dr.M.Sathaiah, CAT, Theni

5. Features
Market Forms
Perfect Competition Monopoly Oligopoly
Monopolistic
Competition
1. No.of Firms Large One A few Many
2. Nature of product
Homogeneous One type
Homogeneous or
Differentiated
Product
differentiation
3. Entry of firms Free No entry Restricted Free
4. Degree of monopoly
power Zero Full
Limited due to
product
differentiation
Limited
5. Price policy of firm
Price taker Price maker Price maker Price maker
6. Market knowledge
Complete Incomplete Incomplete Incomplete
7. Elasticity of demand
Perfectly elastic Less elastic Less elastic Less elastic
8. AR and MR Equal Different Different Different
9. Example
Cabbage, Carrot Train & Electricity
Fertilizer &
Automobiles
Restaurants &
Builders
Dr.M.Sathaiah, CAT, Theni

6. Profit Max Condition
Total curve Approach
TR = TC
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Marginal curve Approach
MR = MC

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Dr.M.Sathaiah, CAT, Theni

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Dr.M.Sathaiah, CAT, Theni