Market Structure – it’s meaning & major determinants.
A market structure is typically associated with the economic analysis of the market behaviour.
Economic theory presumes that price determination and individual firm behaviour are affected in an important way by the type of market under consideration. Thus, distinguishing the state of perfect competition, monopolistic competition, oligopoly and monopoly.
What is a Market?
A market is any place or point of contact in which buyers’and sellers meet for the exchange of goods and services.
In Economics, market may be defined as the meeting of buyers and sellers for an homogeneous product with a prevailing price.
The major determinants of the Market Structure
They are given as;
- The number if sellers in the market.
- The number of buyers in the market.
- The nature of goods and services offered by firms.
- The concentration ratio of the company which shows the largest market shares held by the companies.
- The entry and exit barriers in the particular market.
- The economies if scale. That is, how cost efficient us a firm in producing the goods and services at a low cost.
- The degree of vertical integration. That is, the combining of different stages of production and distribution managed by a single firm.
- The level of product and service differentiation.
The level of customer turnover. That is, the number of customers willing to change their choice witgvresoect to goods and service at the time of adverse market condition.
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