Generally the concept of market structures can be essential to marketing and economics. Both emphasize the environment in which these companies operate and its importance it has on strategic decision making. Economics is more concerned about the degree of market competition and the pricing strategies of these firms. Marketing, on the other hand, concentrates its focus on consumer behaviour.
Basically there are four major market structures – perfect competition, monopolistic competition, oligopoly, duopoly and monopoly. Market Structures categorize companies based on different characteristics like the number of sellers in the overall market, the kind of product, market share, barriers to entry, pricing power, efficiency and profits. Each of these specific criteria is used to describe the circumstances and the environment in which they operate.
A firm can make more effective pricing and production decisions when it has a solid understanding of the industry it functions in. Four market structures exist in economics – perfect competition, monopoly, oligopoly, and oligopoly. These structures can be compared by different characteristics. These characteristics are the number and size of firms in the industry, the amount of control over price held by the firm, the type or nature of product, the conditions of entry and exit into the market, the behaviour of the firms, and the amount of non-price competition. The characteristics of each of these market structures have different affects on our economy and should be managed in a different manner. This paper will outline these various characteristics and provide a narrative on their impact in the different markets. The analysis of the different characteristics is made for different firms in the respective market structure.Degree of competition affect the consumer either positively or negatively, it also impacts on the performance and behaviour of the... [continues]
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