Market structure, or market form, competitive structure, is the state of a market with respect to competition, measured by number and distribution of firms, indicating the competitivity of the market.
Major market structures from most competitive to least:
- Perfect competition – market consisting of a very large number of firms producing a homogeneous product, market makers are well informed, no barriers to entry for both seller and buyer.
- Monopolistic competition – market with a large number of firms producing congeneric product with distinguishable differentiations, barriers to entry is negelectable for both seller and buyer.
- Oligopoly – market dominated by a small number of firms, considerable barriers to entry for seller, no barriers to entry for buyer.
- Oligopsony – market by many sellers but a few buyers, considerable barriers to entry for buyer, no barriers to entry for seller.
- Monopoly – market with only one provider of a good or service, great barriers to entry for seller, no barriers to entry for buyer.
- Natural monopoly – a monopoly that economies of scale cause efficiency to increase continuously with the size of the firm, unable to entry for seller, no barriers to entry for buyer.
- Monopsony – market with only one buyer of a good or service, great barriers to entry for buyer, no barriers for seller.