Eco204/Final Paper Market Structure
Market page 2
Market structure can be defined as homogeneous elements of concrete structure where buyers and seller meet and consign to trade. Market structure is firms or companies that produced identical product which are uniform. There are different types of market structures which includes perfect competition, monopolistic competition, oligopoly and monopoly each of these structure function a certain way. Some of the key factors of market structure are size of firms, entry condition, role of government, price change and differentiation. Some of these elements can be a determinant factor and very influential on the market system. Text materials Amacher, R., & Pate, J. (2013) chapter 9 expound on the characteristic of perfect competition. the text stretches the importance of the six basic assumptions for the model of perfect competition which are large number of sellers, large number of buyers, homogeneous product, free entry into and free exit out of the market, and resources can easily move in and out of the industry. These six assumptions is a must, for perfect competition to exist. Unfortunately in our world ,it is very difficult for perfect competition to exist, but there are market that comes close, for example currency market would be close to perfect competition. Same product, many sellers and buyers, the down side is the market can be influences by external factors. High entry barriers would make profit difficult, long run equilibrium with perfect competition would be affected. It also means all firms would not be at the optimal size, unable to combined variable resources efficiently. There are competitive pressure when it comes to high barrier to entry in perfect competition, when it is difficult to get in a competitive market, firms create clever way to get in and sometime that involve corruption, for example, the taxi cab industry. Market page 3
Monopolistic competition is a type of market structure where their are many producers that sell
Market structure can be defined as homogeneous elements of concrete structure where buyers and seller meet and consign to trade. Market structure is firms or companies that produced identical product which are uniform. There are different types of market structures which includes perfect competition, monopolistic competition, oligopoly and monopoly each of these structure function a certain way. Some of the key factors of market structure are size of firms, entry condition, role of government, price change and differentiation. Some of these elements can be a determinant factor and very influential on the market system. Text materials Amacher, R., & Pate, J. (2013) chapter 9 expound on the characteristic of perfect competition. the text stretches the importance of the six basic assumptions for the model of perfect competition which are large number of sellers, large number of buyers, homogeneous product, free entry into and free exit out of the market, and resources can easily move in and out of the industry. These six assumptions is a must, for perfect competition to exist. Unfortunately in our world ,it is very difficult for perfect competition to exist, but there are market that comes close, for example currency market would be close to perfect competition. Same product, many sellers and buyers, the down side is the market can be influences by external factors. High entry barriers would make profit difficult, long run equilibrium with perfect competition would be affected. It also means all firms would not be at the optimal size, unable to combined variable resources efficiently. There are competitive pressure when it comes to high barrier to entry in perfect competition, when it is difficult to get in a competitive market, firms create clever way to get in and sometime that involve corruption, for example, the taxi cab industry. Market page 3
Monopolistic competition is a type of market structure where their are many producers that sell