Managerial Economics

Pascua, Jhon Mark T. Bsais – 2c

Market structure is the organizational and competitive

characteristics of a market. It is an important concept in
economics as it helps to understand the behavior of firms and
consumers in different market conditions. There are four main
types of market structures: perfect competition, monopolistic
competition, oligopoly, and monopoly. Market structure is an
important concept in economics that helps to understand the
behavior of firms and consumers in different market conditions.
Each market structure has its own unique characteristics, and
understanding these characteristics is essential for businesses,
policymakers, and consumers.

Perfect competition is the most ideal market structure, but

it is also the rarest. It is characterized by a large number of
small firms that produce homogeneous products and have no market
power. In a perfectly competitive market, no firm can influence
the market price, and each firm is a price taker. The barriers to
entry and exit are low, and firms can freely enter or exit the
market without incurring significant costs.

Oligopoly is a market structure in which a small number of

large firms dominate the market. These firms have significant
market power and can influence the price of their products. The
barriers to entry and exit are high, and the market is often
characterized by intense competition and strategic behavior.
Oligopolistic firms often engage in non-price competition, such
as advertising, research and development, and product
differentiation.

Monopoly is a market structure in which a single firm

dominates the market. This firm has complete market power and can
set the price of its products. The barriers to entry and exit are
extremely high, and there are no close substitutes for the firm’s
products. Monopolistic firms often engage in price discrimination
to increase their profits.