12 various forms of market
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Transcript of 12 various forms of market
CONTENTS OF THE TOPIC
• Market Structure
• Price and Output determination under different forms of market structure
Concept of Market? A market is a system by which buyers
and sellers bargain for the price of the product, settle the price and transact their business.
The market may be in one specific placeor
not exist physically at all
Concept of firm & industry• A firm is any business unit organized
under one ownership & management.
• An industry is a group of firms dealing in the same line of business.
• Sangam India Ltd is one of the firms of textile industry of India.
MARKET STRUCTUREMarket structure – identifies how a market is
made up in terms of:
Number of firms in the industryNature of the product producedDegree of competition a firm facesDegree to which the firm can influence priceProfit levelsThe extent of barriers to entryControl over price
Depending on the number of sellers & competition, the market structure is broadly
classified into:-
Perfect competitionImperfect competition
Monopolistic competition
Oligopoly competition
Monopolycompetition
1. PERFECT COMPETITION:- large number of firms with identical products
2. MONOPOLISTIC COMPETITION:- Many firms with product differentiation
3. OLIGOPOLY :- Little or no product differentiation
4. MONOPOLY :- A single producer without close substitute.
1. PERFECT COMPETITIONA Perfect competition is characterized by:-
Buyers and sellers:- Large no. Product:- Homogeneous Entry and free exit of firms :- Free Knowledge :- Perfect Government intervention :- Free Perfect mobility of factors of production.Firms are price takers – have no control over the price they charge for their product
MONOPOLISTIC COMPETITION
“ Monopolistic competition refers to a situation where there are many sellers of
differentiated products. There is competition between many firms making similar products which are close though
not perfect substitutes.”
CHARACTERSTICS OF MONOPOLISTIC COMPETITION
1. Large no. of sellers – “Many and small enough”2. Product Differentiation
QualityAdvertisementPatentSize, Colour, Shape, Packaging etc
3. Free entry and free exit of firms4. Higher Elasticity of Demand.
OLIGOPOLY COMPETITION
“ Oligopoly is a situation where a few large firms compete against each other and
there is an element of interdependence in the decision making of these firms. .”
Derived from Greek word Oligoi (few) + Polein (to sell)
CHARACTERSTICS OF OLIGOPOLISTIC COMPETITION
1. Small number of large firms.2. Interdependence :- decision of one
influenced by decision of other.3. Existence of Price Rigidity4. Advertising.5. Oligopolies are price shapers or setters6. Product may be homogeneous (steel) or
differentiated (automobile).