TOPIC : MARKET

SUBJECT: BUSINESS ECONOMICS

BY: Prof. Sanjay Kr. Mangla

MARKET

MEANING :
Market is a channel or network through which buyers and sellers of a particular product come into contact with each other and exchange of goods and services take place, sellers sell their product and buyers purchase the product.

DEFINITION:
In the words of Prof. Chapman: The term market refers not necessarily to a place but always to a commodity and the buyers and the sellers who are in direct competition with one another.

CLASSIFICATION
MARKET

PERFECT COMPETITION

IMPERFECT COMPETITION

MONOPOLY

DUOPOLY

MONOPOLISTIC COMPETITION

OLIGOPOLY

COLLUSIVE OLIGOPOLY

NON-COLLUSIVE OLIGOPOLY

PERFECT COMPETITION

MEANING: Perfect competition is a market in which there are many firms selling identical products with no firm large enough relative to the entire market to be able to influence market price.

FEATURES: Large number of sellers and buyers Homogeneous product Same price Perfect knowledge Lack of selling cost Free entry and exits of the firms Price is determined by industry not by firm

MONOPOLY

MEANING: Monopoly is a market situation in which there is a single seller, there are no close substitutes of the commodity it produces, there are barriers to entry.

FEATURES: One seller and large number of buyers Restrictions on the entry of the new firms No close substitute Price maker Price discrimination

DUOPOLY

MEANING: Duopoly is a market situation in which there are two sellers producing the same product, and there are large number of buyers.

FEATURES Two sellers Same product No other close substitute

MONOPOLISTIC COMPETITION

MEANING: Monopolistic competition is a market structure where there is a large number of small sellers, selling differentiated but close substitute products.

FEATURES Large number of firms and buyers Production differentiation Freedom of entry and exit of firms Selling costs Price control Imperfect knowledge

OLIGOPOLY

MEANING: Oligopoly is a market situation where there are few sellers of a product, but products of all firms are very close substitute of each other.

FEATURES Interdependence of firms Imperfect knowledge Huge advertising expenditure

DIVISION OF OLIGOPOLY MARKET

CILLUSIVE OLIGOPOLY When all the oligopolistic firms make an agreement on price and output policy, its a form of collusive oligopoly market.

NON-COLLUSIVE OLIGOPOLY

When there is no agreement regarding price and output policy among the oligopolistic firms, its a form of non-collusive oligopoly.