Market structure is based on the characteristics, outcomes, and nature of competition for goods and services in different industries that are classified. Buyers and sellers determine the factor of market structure. The four types of market structures include perfect competition, oligopoly market, monopoly market, and monopolistic competition.
Types of the Market structure
Perfect competition
Perfect competition occurs when there is a large number of small companies or buyers and sellers which are competing against each other. It is considered as unrealistic because there is no big seller with significant influence. All of the sellers in the market sell similar products and they are free to enter or exit the market.
Monopolistic competition
An imperfectly competitive market with characteristics of both a monopoly and a competitive market is referred to as monopolistic competition. Sellers can differentiate their products in terms of quality and branding to stand out from the competition. In this kind of competition, sellers look at what their rivals are charging and don’t think about how their own prices affect their rivals.
Oligopoly market
An oligopoly market is one in which a small number of large companies compete with one another or work together to sell products that are different or the same. Since there are not many players on the lookout, their serious procedures are subject to one another.
Monopoly market
A monopoly market is defined as a single company that represents the whole industry. It is the sole seller of the product in the entire market which restricts other companies from entering the market and having no competitor. Monopoly markets have licenses issued by the government and have high initial setup costs. Being a single seller gives it the power to control the market and set prices for its goods.
Monopolies are extremely undesirable, a pure monopoly is very rare in reality.
