Types of markets

Group-5

What is a market ?

Any place where the sellers of a particular good or service

can meet with the buyers of that goods and service where
there is a potential for a transaction to take place.

Markets vary in location, types, geographic range and size.

The main purpose of a market is to facilitate trade.

Perfect Competition

Characterized by different buyers and sellers.

Infinite number of buyers and sellers.

With so many buyers and sellers it is impossible for any one participant to
alter the prevailing price in the market

Multiple suppliers have an insignificant market share.

Homogeneous products are supplied by each supplier.

Customers have full information on prices and trends.

There are no barriers to exit and entry.

Monopoly

Only one producer of a particular good or service

Able to charge whatever price they wish due to the absence

of competition

Overall revenue will be limited by the ability or willingness

of customers to pay their price.

A market can become a monopoly when one firm has sole

control of a resource that is necessary for the production of
the product.

Oligopoly

There are a handful of producers, or at least a handful of producers that

make up a dominant majority of the production in the market system.

Characterized by a limited number of competing sellers who sell similar

or different products.

Sellers compete with each other by aggressive advertising and

improved service delivery.

An oligopoly sets barriers to entry and makes it difficult for new sellers
to enter the market. Barriers include patent rights, financial
requirements and legal barriers.

Monopolistic Competition
The market consist of many buyers and sellers who
trade over a range of prices rather than a single market
price is called monopolistic competition.
Sellers try to develop difference by using customer
segments, and in addition to price, freely uses
branding, advertising, and personal selling to set their
offers apart.

DUOPOLY

Duopoly is a specific type of oligopoly where only

two producers exist in one market.

In reality, this term is generally used where only two

firms have dominant control over a market.

Oligopsony

An oligopsony is a market form in which the number of

buyers is small while the number of sellers is large.

This typically happens in a market for inputs where

numerous suppliers are competing to sell their product to a
small number of (often large and powerful) buyers.

Pure/Perfect competition

Typeof
market

Natureof
product

Numb Number
erof
ofsellers
buyers

Entry
conditions

Price

Pure/Perfect
competition

Homogene
ous for all
firms

Large

Free entry
and exit

Uniform Bhel Puri

every
stalls at
where
Miramar
beach

Large

Example

monopoly
Typeof
market

Natureof Number
product
ofbuyers

Homogen
Monopoly eous for
all firms

Large

Number
ofsellers

Entry
conditions

Price

Example

One

Entry
barriers

High

Indian
railways

Oligopoly
Typeof
market

Natureof
product

Number Number Entry

of
of
conditions
buyers
sellers

Oligopoly

Homogene
ous or
differentiat
ed

Large

Few

Price

Examples

By product
High
differentiation
and few firms
domination

Air India,
kingfisher,
Indigo

Monopolistic competition
Typeof
market

Natureof Numbe
product
rof
buyers

Number
ofsellers

Entry
Price
conditions

Examples

Monopolistic
competition

Product
Large
differentia
tion by
each firm

Many

Product
differentiat
ion acts as
entry
barrier

Micromax
and Lava
mobile

Higher than
perfectly
competitive
but lower
than
monopolistic

Duopoly
Typeof
market

Natureof
product

Number Number
of
ofsellers
buyers

Duopoly

Homogeneous Large
or
differentiated

Two

Entry
conditions

Price Example

By product
High
differentiation
and by one or
two firms
dominating

Pepsico and
Coke

Oligopsony
Typeof
market

Nature
of
product

Numberof Number Entry

Price
buyers
of
conditions
sellers

Oligopsony

Homoge Few buyers

neous or (some are
differenti main)
ated

Large

No entry
barriers

Large
buyers try
to reduce
the price

Examples

Many
sellers of
guar but
only few
companies
buy it for
use in
fracking.

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