Forms of Market

   Micro economics

                  Forms of Market 

~ Perfect Competition: It is a form of market where    there is large number of buyers ans sellers of commodity. 

  Homogenous product is sold and its price is determined by the forces of supply and demand. 

An individual buyer or seller has no control over price. 

Features of Perfect Competition:

1. Large Number of Firms or Sellers

2. Large Number of Buyers

3. Homogenous Product

4. Perfect Knowledge

5. Free Entry and Exit of Firms

6. Perfect Mobility

Conclusions:-

• A firm under perfect competition is a Price Taker, not a price maker. 

• Demand curve of the firm under perfect competition is Perfectly Elastic. 

• A firm under perfect competition earns only normal profits in long run. 

~ Monopoly: It is a form of market in which there is single seller or producer of a commodity.

There are no close substitute of the monopoly product and there are legal, technical or natural barriers to the entry of the firms in the monopoly market.

A Monopolist has complete over the price and can also practice price discrimination. 

Features of Monopoly:

1. One Seller and Large Number of Buyers

2. Restrictions on the Entry of New Firms

3. No Close Substitute

4. Full Control Over  Price

5. Possibility of Price Discrimination

Demand curve of Monopoly Firm-

~ Monopolistic Competition: It is a form of market in which there are many buyers and sellers of the product, but each seller is different from that of other. 

It includes features of monopoly and perfect competition. 

 Features of Monopolistic Competition:

1. Large Number of Buyers and Sellers

2. Product Differentiation

3. Freedom of Entry and Exist 

4. Lack of Perfect Knowledge

5. Non-price Competition

Demand curve of Monopolistic Competition-

~ Oligopoly: It is a form of market in which there are a few big firms and a large number of buyers of a commodity. Example There are only few car producers in Indian Auto Market- Toyota, Ford, Volkswagen, GM, BMW and Audi are some well known brands. 

Price and output decisions of each producer significantly impacts the price and output decisions of the other producer. 

Features of Oligopoly:

1. Small Number of Big Firms

2. High Degree of Independence

3. Entry Barriers

4. Non-price Competition

5. Not Possible to Determine Firm’s Demand Curve

Note: Author does not claim over work! Work is derived from various sources.