THE MARKET STRUCTURES

THE MARKET IS MORE THAN JUST A STATE OF EXCHANGING

GOODS…

…the market possesses the power

yielded by buyers and sellers in
negotiating with the market
MARKET POWER DEFINED

The ability of any actor or group of

actors in the market to significantly
influence the price in the market and the
quantity to be produced or sold.
THE ABILITY FOR MARKET PLAYERS TO POSSESS MARKET
POWER…

… will depend on the market

structure.
CLASSIFICATIONS OF MARKET STRUCTURE
PERFECT COMPETITION

Is a market structure where no single seller or buyer has power

to determine the price and the level of output in the market.
Has numerous firms and buyers supplying and buying the
product at any one time.
Because of the number of buyers and sellers, not a single one of
them has significant influence on the price and quantity of the
goods due to its undifferentiated nature.
MONOPOLY

A market structure characterized by one seller in the market.

A market structure where there is only one buyer is a monopsony.
Because only one seller or buyer exists, this single seller or buyer
have huge market power and influence.
Monopolists/monopsonists also create highly differentiated
products that discourages other players from joining them.
Examples are utility companies
OLIGOPOLY

A market structure characterized by a few sellers

producing similar and differentiated products
Examples are large scale cement and steel companies, and
the oil sector
Due to its setup, it is prone to collusion, as players come
together with the goal of manipulating prices of its goods
MONOPOLISTIC COMPETITION

Has elements of both the competitive and monopolistic markets

Competitive because of numerous sellers and buyers in the
market that freely enters and leaves it
Monopolistic because products sold in the market are
differentiated by the seller through various means of advertising
and numerous ways of packaging
THE IMPLICATIONS OF MARKET STRUCTURES
FOR ENTREPRENEURS
ENTREPRENEURS WITH LIMITED RESOURCES CAN ONLY ENTER
A PERFECTLY COMPETITIVE MARKET

Because entry and exit is easy

But with many players,
earnings can be limited as well
MONOPOLISTIC COMPETITIVE MARKETS MAY GIVE SMALL
SCALE BUSINESSES SOME ADVANTAGE

A small business who can differentiate

their goods well stands a chance of earning
big in a monopolistic competitive market
Example: Kangkong Chips
THE COST OF DOING BUSINESS REQUIRES ENTREPRENEURS TO
CONSIDER INTEREST AND INVESTMENT RATES

Because internal funds from businesses

may not be sufficient, borrowing funds
from banks and other lenders may be
necessary and this requires cost
BUSINESS OPERATIONS ON THE GROUND SHOULD CONSIDER
RENTAL AND OTHER LOGISTICS COSTS

It may not be feasible for start up businesses to

place their offices right away in high end business
districts due to high rental costs
This explains partly why online businesses are
rising fast
PLANNING FOR MANPOWER TO MANAGE COSTS OF PAYING
MINIMUM WAGES SHOULD BE CONSIDERED

Companies must only hire the

right amount of people to manage
the costs of paying wages to them
TAX CONSIDERATIONS

By rapidly depreciating their assets, companies can avail

of lower tax liabilities and bring more cash to them
Certain tax exemptions granted by the government can
also be given to encourage businesses to set up their shop
in the country