APPLIED ECONOMICS

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.