In economics, a market refers to any arrangement that allows buyers and sellers to interact and exchange goods and services, either physically (like a retail shop) or virtually (like an online platform).
> Definition:
A market is a system or place where buyers and sellers come together to exchange goods and services at agreed prices.
? Classification of Markets
Markets can be classified based on various factors:
Basis Types
Area/Coverage Local, Regional, National, International
Nature of Commodities Consumer goods, Capital goods, Services
Volume of Transactions Wholesale market, Retail market
Time Period Short period market, Long period market
Market structure refers to the organizational and competitive characteristics of a market that influence how firms behave and how prices are determined.
> It includes factors like the number of buyers and sellers, type of product, ease of entry and exit, and control over price.
---
? Types of Market
Structures (Explained in Detail)
1. Perfect Competition
Features:
Large number of buyers and sellers
Homogeneous product
No control over price (price takers)
Free entry and exit
Perfect information
Example: Agricultural markets
---
2. Monopoly
Features:
Single seller
Unique product (no close substitute)
High barriers to entry
Price maker
Example: Indian Railways (before liberalization)
---
3. Monopolistic Competition
Features:
Many sellers
Differentiated products
Some control over price
Free entry and exit
Focus on advertising and branding
Example: Clothing brands, restaurants
---
4. Oligopoly
Features:
Few large firms dominate
Interdependence among firms
Products may be homogeneous or differentiated
Significant barriers to entry
Possibility of price leadership or cartels
Example: Automobile industry, telecom sector
---
✅ Conclusion
Understanding market structures helps businesses and policymakers make informed decisions regarding pricing, production, competition, and regulations. Each structure presents unique challenges and opportunities for firms in terms of profitability and consumer welfare
