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Business Jargons

A Business Encyclopedia

Market Structure

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

Market Structure

  1. Perfect Competition Market Structure
  2. Monopolistic Competition Market Structure
  3. Oligopoly Market Structure
  4. Monopoly Market Structure

The major determinants of the market structure are:

  1. The number of sellers operating in the market.
  2. The number of buyers in the market.
  3. The nature of goods and services offered by the firms.
  4. The concentration ratio of the company, which shows the largest market shares held by the companies.
  5. The entry and exit barriers in a particular market.
  6. 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.
  7. The degree of vertical integration, i.e. the combining of different stages of production and distribution, managed by a single firm.
  8. The level of product and service differentiation, i.e. how the company’s offerings differ from the other company’s offerings.
  9. 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.

Related terms:

  1. Oligopoly Market
  2. Perfect Competition
  3. Types of Oligopoly Market
  4. Monopoly Market
  5. Monopolistic Competition

Reader Interactions

Comments

  1. Jash Peterosn says

    May 19, 2018 at 8:55 am

    This is so understandable thank you

    Reply
  2. emma watson says

    June 27, 2018 at 11:22 pm

    Very good explanation about Market Structure. thanks

    Reply
  3. Iceman Mawus says

    August 21, 2018 at 5:06 am

    Thanks a lot …. easy way to understand 🤙

    Reply
  4. Mukul Sen says

    January 22, 2019 at 7:20 pm

    Very easy answer of the market structure

    Reply
  5. susantha says

    January 30, 2019 at 9:54 am

    Thanks, clear explanation

    Reply
  6. carrie lang says

    February 14, 2019 at 9:28 am

    ya thank a lot is very easy to understand what is marketing structure

    Reply
  7. Kadeisha says

    March 24, 2019 at 8:33 pm

    Excellent interpretation and explanation. However, my concern is that I would like to know the author and year of publication. Thanks

    Reply
    • Megha M says

      March 25, 2019 at 9:49 am

      Author name is Megha M. and It is published on 8 December, 2015

      Reply
  8. Ceejay Maddog says

    April 30, 2019 at 12:56 am

    Very Helpful
    Thanks

    Reply
  9. Brighton C Chisanga says

    October 9, 2019 at 3:15 pm

    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.

    Reply
  10. Kennedy says

    November 6, 2019 at 11:56 am

    My name is Kennedy from BUC Kenya, the information given is very helpful. Thanks alot🤝

    Reply
  11. adeshina says

    February 17, 2020 at 2:30 pm

    Very good 👍

    Reply
  12. Subhan Hashami says

    August 22, 2020 at 11:43 am

    Very helpful information of structure of market. thanks

    Reply
  13. I am Tsigebirhan M says

    December 5, 2020 at 8:18 am

    It is a great helpful information of structure of marketing.

    Reply
  14. Samson Emma Ezinwa says

    January 30, 2021 at 10:43 pm

    Your explanation on market structure is so easy to understand. THANKS.

    Reply
  15. Elvis says

    June 30, 2021 at 7:16 am

    Very precise. Not found in most regular textbooks

    Reply
  16. navod kalansuriya says

    July 23, 2021 at 10:26 am

    very useful

    Reply

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