Definition: The Market Structure refers to the characteristics of the market either organizational or competitive, that describes the nature of competition and the pricing policy followed in the market.
Thus, the market structure can be defined as, the number of firms producing the identical goods and services in the market and whose structure is determined on the basis of the competition prevailing in that market.
The term “ market” refers to a place where sellers and buyers meet and facilitate the selling and buying of goods and services. But in economics, it is much wider than just a place, It is a gamut of all the buyers and sellers, who are spread out to perform the marketing activities.
Types of Market Structure
- Perfect Competition Market Structure
- Monopolistic Competition Market Structure
- Oligopoly Market Structure
- Monopoly Market Structure
The major determinants of the market structure are:
- The number of sellers operating in the market.
- The number of buyers in the market.
- The nature of goods and services offered by the firms.
- The concentration ratio of the company, which shows the largest market shares held by the companies.
- The entry and exit barriers in a particular market.
- The economies of scale, i.e. how cost efficient a firm is in producing the goods and services at a low cost. Also the sunk cost, the cost that has already been spent on the business operations.
- The degree of vertical integration, i.e. the combining of different stages of production and distribution, managed by a single firm.
- The level of product and service differentiation, i.e. how the company’s offerings differ from the other company’s offerings.
- The customer turnover, i.e. the number of customers willing to change their choice with respect to the goods and services at the time of adverse market conditions.
Thus, the structure of the market affects how firm price and supply their goods and services, how they handle the exit and entry barriers, and how efficiently a firm carry out its business operations.
Jash Peterosn says
This is so understandable thank you
emma watson says
Very good explanation about Market Structure. thanks
Iceman Mawus says
Thanks a lot …. easy way to understand 🤙
Mukul Sen says
Very easy answer of the market structure
susantha says
Thanks, clear explanation
carrie lang says
ya thank a lot is very easy to understand what is marketing structure
Kadeisha says
Excellent interpretation and explanation. However, my concern is that I would like to know the author and year of publication. Thanks
Megha M says
Author name is Megha M. and It is published on 8 December, 2015
Ceejay Maddog says
Very Helpful
Thanks
Brighton C Chisanga says
My name is Brighton Chisanga from The Copperbelt University In Zambia 🇿🇲, this information is very much helpful.
It has really boosted my scores in Business Environment.
Kennedy says
My name is Kennedy from BUC Kenya, the information given is very helpful. Thanks alot🤝
adeshina says
Very good 👍
Subhan Hashami says
Very helpful information of structure of market. thanks
I am Tsigebirhan M says
It is a great helpful information of structure of marketing.
Samson Emma Ezinwa says
Your explanation on market structure is so easy to understand. THANKS.
Elvis says
Very precise. Not found in most regular textbooks
navod kalansuriya says
very useful