APPLIED ECONOMICS

( Chapter 5 )
RIZELLE ANGELICA N. BITUIN
INSTRUCTOR
 MARKET STRUCTURE
“Person’s behavior varies
depending on the people around
him…the same with the firm…
 Market Structure
- Defined as the organizational and other
characteristics of a market. It focus on those
characteristics which affect the nature of
competition and pricing, but it is important not to
place too much emphasis simply on the market
share of the existing firms in an industry.
 Market Structure

Perfect Imperfect
Competition Competition

Monopolistic
Competition
Oligopoly Monopoly
 Perfectly Competition Market
- A market structure which is
known for many buyers and
many sellers selling the same
product.
CHARACTERICS:
• There are many buyers and sellers in the market.
• The products sold by the sellers are homogenous.
• Firms can freely enter or exit the market.
• Perfect information about prices.
Different Market Situation
•Monopoly
•Oligopoly
•Monopolistic Competition
 Monopoly
•It is considered as the
extreme of imperfect
competition.
CHARACTERISTICS:

• It is the sole seller of its product or the

only producer of goods and services.
• Its product does not have close
substitutes.
Classification of Monopoly
1. Natural Monopoly – Single firm can supply the entire market.
2. Legal Monopoly – Government grants to a private individual
or firm over the product or service.
3. Coercive Monopoly – It includes the principle of pure
Monopoly arises because of the barriers to entry.
- Technological barriers
- Legal barriers
 Oligopoly
- It is a structure
having few sellers.
CHARACTERISTICS:

•Few sellers offering similar or

identical products.
•Interdependent Firms.
Monopolistic Competition
- It is a type of market
structure having many buyers
and sellers selling differentiated
product.
CHARACTERISTICS:

•Many sellers
•Product Differentiation
•Free entry and exit.