SSC Adda: Brief Insight of Market structure

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http://www.sscadda.com/2015/01/brief-insight-of-market-structure.html

Brief Insight of Market structure

Hello readers,here is brief discription of market structurethis will

help you in upcoming SSC exams..!!
A market is a set of buyers and sellers, commonly referred to as agents,
who through their interaction, both real and potential, determine the price
of a good, or a set of goods and services. The concept of a market
structure is therefore understood as those characteristics of a market that
influence the behaviour and results of the firms working in that market.
The main aspects that determine market structures are: the number of
agents in the market, both sellers and buyers; their relative negotiation
strength, in terms of ability to set prices i.e. either price taker or price
maker; the degree of concentration among them; the degree of
differentiation and uniqueness of products; the way of entering and exiting
the market. The interaction and differences between these aspects allow
for the existence of several market structures, from which we can highlight
the following:

Perfect competition:
Perfect competition (sometimes called pure competition) describes
markets such that no participants are large enough to have the market
power to set the price of a homogeneous product.This market is
considered to be unrealistic but it is nevertheless of special interest for
hypothetical and theoretical reasons.
Features of perfect competition
A large number buyers and sellers
No barriers of entry and exit
Homogeneous products
Zero transaction costs
Perfect information

Imperfect competition:
Imperfect competition which includes all situations that differ from perfect
competition. Sellers and buyers can influence in the determination of the
price of goods, leading to efficiency losses. Imperfect competition includes
market structures such as:
Monopoly- it represents the opposite of perfect competition.
This market is composed of a sole seller who will therefore
have full power to set prices.Example Indian railways.
Oligopoly- in this case, products are offered by a series of
firms. However, the number of sellers is not large enough to
guarantee perfect competition prices. These markets are
usually studied by analysing duopolies, since these are easier
to model and the main conclusions can be extrapolated to
oligopolies.Example
Mobile
networks,
Cement
industry,automobile industry.
Duopoly- a special case of an oligopoly with two firms with
maximum market share. Example- Pepsico and Coco-cola
Oligopsony- is a market form in which the number of buyers is
small while the number of sellers in theory could be large.One
example of an oligopsony in the world economy is cocoa,
where three firms (Cargill, Archer Daniels Midland, and
Callebaut) buy the vast majority of world cocoa bean
production, mostly from small farmers in third-world countries.

2/9/2015 2:17 AM

SSC Adda: Brief Insight of Market structure

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http://www.sscadda.com/2015/01/brief-insight-of-market-structure.html
production, mostly from small farmers in third-world countries.
Monopsony- is a market form in which only one buyer
interfaces
with
would-be
sellers
of
a
particular
product.Example - military industry , space industry.

2/9/2015 2:17 AM