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Market And Market Structures

Presented by Insha Farooq

+ Market:

Benham stated market as any area over which buyers and sellers are in close touch with one another either directly or through dealers , that the price obtained in one part of market affects the price paid in other

Stonier and Hague explains the term market as'' any org whereby buyers and sellers of good r kept in close contact with each other there is no need to for a market to be in a single building

the only essential for a market is that all buyers and sellers should be in constant touch with each other , either because they r in the same building or because or they r able to contact through telephone or internets.

+ Market Classification

On the basis of area On the basis of nature of transaction On basis of volume of business On the basis of time On the basis of status of seller On the basis of regulation

Perfect competition:

A very large no of relatively small buyers and sellers . All sellers sell homogenous products The firms are free to enter or leave the market The firms in industry dont collude with each other . The factors of production must be free to enter or leave the industry. Each buyer and seller operates under the condition od certainty.

+ Economies in such situations:

It

ensures maximum welfare of the people as a whole . firm tends to attain most efficient size

Each

MONOPOLY:

The single firm producing the product is in itself both the firm and industry. No rivalry or direct competition Indirect rivalry may occur in form of the existence of small substitutes They are price makers

+ Origin of monopoly :

Patent rights for products Gov. policies such as granting licenses or imposing foreign trade restrictions. Ownership and control over some strategic raw materials Exclusive knowledge of technology by the firms. Size of the market can accommodate a single firm Prevention of entries

+ Price discrimination

It is said to exist when the same product is sold for different prices to different buyers. Conditions for price dicr. Are: Difference in price elastisities. Market segmentation Efficient separation of sub markets Legal sanction for price discrimination Various brands Some buyers are ignorant or lack mobility

Monopolistic competition

It refers to the situation where there are many sellers of differentiated products . There is competition keen though not perfect, between many firms making very similar products .since the product is differentiated each seller can independently decide about his own price output policies. Many number of sellers Product differentiations freedom of entry and exit

FEATURES

 Price difference with in price range Increase elasticity of demand Price war Gift articles Unfair methods

Oligopoly :

Is a situation where a few large firms compete against each other and there is an element of interdependence in the decision making of these firmsfeatures of oligopoly are Small number of large sellers Interdependence Existence of price rigidity Presence of monopoly element Advertising Restriction to the entry

+ Classifying oligopoly situation:

On basis of product differentiation: Entry of firm. Price leadership. Agreement between the firms.

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