This lesson will act as an introduction to market structure aiming to make you (the reader) aware of the basics of market structure as well as some information on the four main types.
WHAT IS MARKET STRUCTURE?
A Market’s structure can be defined as the features that determine the behaviour and performance of firms in the industry. These features are what define a market structure. They are: Number of Sellers, barriers to entry and the types of products sold.
*Barriers to entry are anything that prevent new firms from entering and competing in an industry. Some of the barriers are:
Government regulations
Rules set by the government to prevent or limit firms entering an industry for eg. In most Caribbean economies, there is only one or two firms providing utilities such as water due to government regulations .
Patents
A patent is a form of intellectual property that gives its owner the legal right to exclude others from making, using, selling and importing an invention, product or process for a limited period of time (usually many years) , in exchange for publishing an enabling public disclosure of the invention
Large capital outlay
Money spent to acquire, maintain, repair, or upgrade capital assets. Capital assets, also known as fixed assets, may include machinery, land, facilities, or other business necessities that are not expended during normal use.
Types of Market Structure (TO BE DISCUSSED IN DETAIL IN LATER LESSONS)
There are 4 main types of market structure:
*Perfect Competition
*Monopoly
*Oligopoly
*Monopolistic Competition
Here's a chart with a quick synopsis of the characteristics of each structure.
Stay tuned for when we take a look at the structures in greater detail.