{"id":5423,"date":"2019-02-14T09:51:47","date_gmt":"2019-02-14T04:21:47","guid":{"rendered":"http:\/\/astan.lk\/al_virtualclassroom\/?p=5423"},"modified":"2019-02-16T10:15:43","modified_gmt":"2019-02-16T04:45:43","slug":"market-structure","status":"publish","type":"post","link":"https:\/\/astan.lk\/al_virtualclassroom\/market-structure\/","title":{"rendered":"Market Structure"},"content":{"rendered":"<ul>\n<li>Market and industry are concepts with similar meanings.<\/li>\n<li>The sum of all firms which produce homogeneous goods is termed an industry.<\/li>\n<li>Goods and services produced by firms are sold in various market situations.<\/li>\n<li>These market situations can be termed market structures.<\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\"><strong>The following criteria can be used to classify a market structure.<\/strong><\/span><\/h3>\n<p>Number of firms in the market.<\/p>\n<ul>\n<li>Nature of goods and services produced.<\/li>\n<li>Entry to and exit from market.<\/li>\n<li>Nature of competition among firms.<\/li>\n<\/ul>\n<p>According to the changes of market features the nature of market structure varies \/ differs<br \/>\nFour market structures can be classified based on the above criteria.<\/p>\n<ul>\n<li>Perfect competition<\/li>\n<li>Monopoly<\/li>\n<li>Monopolistic competition<\/li>\n<li>Oligopoly<\/li>\n<\/ul>\n<p><strong>Market situations with ease of entry, a large number of firms which produce homogeneous products, is termed, Perfect competition<\/strong><\/p>\n<h3><span style=\"color: #000000;\">Perfect competition market has the following characteristics.<\/span><\/h3>\n<p>&nbsp;<\/p>\n<ul>\n<li>Products are homogeneous<\/li>\n<li>A large number of buyers and sellers are present in the market<\/li>\n<li>Ease of entry to the market<\/li>\n<li>Perfect information can be taken about a market.<\/li>\n<\/ul>\n<p>Close characteristics of Perfect competition could be seen in the agriculture, fishing, industry and mining industry<\/p>\n<p>Market situations with one industry and one firm and barriers to entry is termed monopoly.<\/p>\n<h3><span style=\"color: #000000;\">A Monopolistic market has the following characteristics.<\/span><\/h3>\n<ul>\n<li>Only one firm is involved in production<\/li>\n<li>Specialty in production<\/li>\n<li>Barriers to entry to the industry<\/li>\n<li>Imperfect information on the market<\/li>\n<\/ul>\n<p>Because one firm is in a monopolistic market, it can influence market price<br \/>\nDemand curve of monopoly is a downward sloping curve.<br \/>\nIt can be illustrated as follows.<\/p>\n<p><a class=\"fancybox\" href=\"http:\/\/astan.lk\/al_virtualclassroom\/wp-content\/uploads\/2017\/01\/Untitled-1.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-6643 size-medium\" src=\"http:\/\/astan.lk\/al_virtualclassroom\/wp-content\/uploads\/2017\/01\/Untitled-1-300x255.jpg\" alt=\"Untitled-1\" width=\"300\" height=\"255\" \/><\/a><br \/>\nSupplier of monopolistic firms acts as a price maker.<br \/>\nExamples of a monopolistic market are, water supply, electricity, railway<br \/>\netc.<\/p>\n<h3><span style=\"color: #000000;\">The following factors determine entry to the monopolistic market.<\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">Ownership of basic inputs -&gt; To avoid entry of other firms to produce the good.<\/span><\/li>\n<li><span style=\"color: #000000;\">Government legislator obstructions -&gt; Goods should be produced under government licences..<\/span><\/li>\n<li><span style=\"color: #000000;\">Returns to scale -&gt; Producing goods by institutions which are involved in the market ( Natural Monopoly).<\/span><\/li>\n<\/ul>\n<p>Both characteristics of Perfect competition and Monopoly can be seen in a market situation which is called Monopolistic competition<\/p>\n<h3><span style=\"color: #000000;\">The following characteristics can be illustrated in a Monopolistic competition market<\/span><\/h3>\n<ul>\n<li><span style=\"color: #000000;\">A large number of sellers.<\/span><\/li>\n<li><span style=\"color: #000000;\">Differentiated goods.<\/span><\/li>\n<li><span style=\"color: #000000;\">Ease of entry.<\/span><\/li>\n<li><span style=\"color: #000000;\"> Most exceptional characteristics of Monopolistic competition is differentiation of goods.<\/span><\/li>\n<li><span style=\"color: #000000;\">Goods differentiation means, that every firm will differentiate his good with<\/span><br \/>\n<span style=\"color: #000000;\"> other supplies and provide it to the market.<\/span><\/li>\n<li><span style=\"color: #000000;\">Because of differentiation of goods, one good of a firm is not a perfect<\/span><br \/>\n<span style=\"color: #000000;\"> substitute to another good of another firm<\/span><br \/>\n<span style=\"color: #000000;\"> Examples &#8211; different soaps, Tooth paste and Shoes<\/span><\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\">Because of differentiation of goods, production firms have to compete with each other, and this ability will strengthen them with the following factors.<\/span><\/h3>\n<ul>\n<li>Quality of these good<\/li>\n<li>Price of good<\/li>\n<li>Marketing<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li>The demand curve of a monopolistic competitive market slopesdownwards.<\/li>\n<li>Oligopoly is defined by a limited number of firms in the market.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>The following characteristics can be seen in Oligopoly<\/h3>\n<ul>\n<li>These is a artificial or natural barriers to limit new firms entering the<br \/>\nindustry.<\/li>\n<li>There is a small number of firms competing in industry.<\/li>\n<li>Market imperious. (Imperious attitude in market)<\/li>\n<\/ul>\n<h3><span style=\"color: #000000;\">The following are the barriers to limit new firms entering the industry<\/span><\/h3>\n<ul>\n<li>Returns to scale.<\/li>\n<li>Goodwill.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li>Because of a small number of firms in market the portion of market for each firm is relatively high.<\/li>\n<li>Therefore firms in the market are interdependent.<br \/>\nExamples of Oligopolistic industries are newspapers, broadcasting<br \/>\nservices, soap, soft drinks commercial bank, Gas etc.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Market and industry are concepts with similar meanings. The sum of all firms which produce homogeneous goods is termed an industry. Goods and services produced by firms are sold in various market situations. These market situations can be termed market structures. The following criteria can be used to classify a market structure. Number of firms [&hellip;]<\/p>\n","protected":false},"author":842,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[54,2683],"tags":[],"class_list":["post-5423","post","type-post","status-publish","format-standard","hentry","category-economics","category-unit-3-en"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Market Structure - Learning &amp; Education Portal<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/astan.lk\/al_virtualclassroom\/market-structure\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Market Structure - Learning &amp; Education Portal\" \/>\n<meta property=\"og:description\" content=\"Market and industry are concepts with similar meanings. 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