Market structure

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In economics, market structure (also known as market form) refers to the degree of competitiveness that exists within a system for producing and allocating goods and services. On the supply side, market structure concerns itself with the level of competition that exists among firms, as determined by such factors as the number of firms operating within the market, the homogeneity of their products, and the amount of market power that each retains. The primary types of market structure on the supply side are:

  • Perfect competition, in which there are a great many firms all producing the same or highly similar products,
  • Monopolistic competition, in which there are a large number of firms that sell differentiated products,
  • Oligopoly, in which there are only a few firms, each with substantial market power, and
  • Monopoly, in which there is a single firm.

The primary types of market structure on the demand side (i.e. with regard to consumers) are:

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