Structure Of The Listed Markets As Explained By Number Of Buyers And Sellers, Product Differentiation,Degree Of Freedom Of Entry And Availability Of Information
Economics notes
Structure Of The Listed Markets As Explained By Number Of Buyers And Sellers, Product Differentiation,Degree Of Freedom Of Entry And Availability Of Information
➡️ Perfect competition is a market structure where there are many buyers and sellers, all of whom have perfect knowledge of the market and are price takers. This means that no single buyer or seller can influence the price of the good or service.
➡️ Imperfect competition is a market structure where there are few buyers and sellers, and they have imperfect knowledge of the market and are price makers. This means that a single buyer or seller can influence the price of the good or service. Examples of imperfect competition include monopoly, monopolistic competition, oligopoly, and natural monopoly.
➡️ Monopoly is a market structure where there is only one seller of a good or service, and they have complete control over the price. Monopolistic competition is a market structure where there are many sellers of a similar good or service, but each seller has some control over the price. Oligopoly is a market structure where there are a few sellers of a good or service, and they have some control over the price. Natural monopoly is a market structure where there is only one seller of a good or service, and they have complete control over the price due to economies of scale.
What is the difference between a perfectly competitive market and a monopolistic market?
In a perfectly competitive market, there are many buyers and sellers, the products are homogeneous, there is freedom of entry and exit, and there is perfect information. In a monopolistic market, there is only one seller, the product is unique, there are barriers to entry, and there may be imperfect information.
How does product differentiation affect market structure?
Product differentiation refers to the differences between products in a market. When products are highly differentiated, there may be fewer competitors and less price competition. This can lead to a monopolistic or oligopolistic market structure. When products are less differentiated, there may be more competitors and more price competition, leading to a more competitive market structure.
How does the degree of freedom of entry affect market structure?
The degree of freedom of entry refers to the ease with which new firms can enter a market. When there are low barriers to entry, such as low start-up costs or few regulations, there may be more competition and a more competitive market structure. When there are high barriers to entry, such as high start-up costs or strict regulations, there may be fewer competitors and a less competitive market structure.