EconGuru Economics Guide » Market structure

Market structure

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.