TYPE OF MARKET STRUCTURE

PERFECT COMPETITION DEFINITION A market structure characterised by many small firms, which sells homogeneous products, easy entry and exit and perfect knowledge of the market. Many small firms Homogeneous products Freedom of entry and exit MONOPOLY Market structure characterised by a single seller. MONOPOLISTIC COMPETITION A market structure characterised by many small sellers, differentiated products and easy market entry and exit. Many small sellers OLIGOPOLY A few sellers, of homogeneous or differentiated products with difficult market entry.

NUMBER OF FIRM TYPE OF PRODUCTS ENTRY AND EXIT MARKET

Single seller Unique product Hight barriers to entry (Ownership of vital sources, legal barriers, economies of scale, large initial capital required) Price makers

A few sellers but large in size (large firm) Differentiated product Homogeneous / (brands,packaging,wrapper) differentiated products Easy Difficult entry

ABILITY FIRM TO CONTROL PRICE

Price takers Perfect knowledge of market

Price makers (because product differentiation)

TYPE

EXAMPLE

Farmers (rice)

a) Natural monoply b) Industrial/ commercial monopoly Crude oil industry, Petronas

Mutual interdepndence - Fewness of oligopoly firms, one firms pricing and output policies can affect the market price. -

Food and other services

Tobacco , automobiles, aircraft, steel and oil industry.

TYPE OF MARKET STRUCTURE

TYPE OF MONOPOLY Natural monopoly : One firm can meet the entire market demand at a lower price as compared to two or more firms. Eg : railways, telecommunications, water services, electricity, mail delivery and computer software. (high fixed costs) Industrial monopoly Industries for which the government sets legal barriers where entry is completely prevented. Eg : company as eBay, Microsoft Windows, SIRIM etc.