Market Structures

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Market Structures |

Conan Goussard |

Dr L. Barnard |

Microeconomics, ECON 210Embry-Riddle Aeronautical University07/27/2015 |

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Abstract

Market structure is an interesting and important area of study in Economics. Markets are ever evolving giving rise to new structures. But the basic market forms in terms of the degree of competition as described in economic theory remains the same. In this paper we discuss the four main market forms, monopoly, oligopoly, monopolistic competition and perfect competition. We cite real life examples of such market forms. We have given statistics to establish our findings about the market structure. The market shares shown in the data gives us information about the degree of competition and hence the market form. If the market is shared by few major sellers we can conclude that it is an oligopolistic market. If one seller dominates it is a monopoly. If there is no clear dominance we know that the market is characterized by competition. We have cited real life examples for each market form and have discussed the features to establish the link between the real world and economic theory. We have shown how the real world scenario supports economic theory and how economic theory can be enriched through the observations we gather from the real world market structures.

I. Market Structures

In terms of economic theory market can be defined as a system of coordination between the buyers and sellers of a commodity or service. Markets can be classified in terms of the particular good or service, like the market for cell phones. Markets are also distinguished in terms of the geographical area. The local market, the world market and likewise. In economic analysis we classify markets in terms of the degree of competition present in the market. This helps us understand the pricing technique, the strategic inter-dependence of the sellers, the consumers gain or loss and the profit earned by the producers,...