What are the different forms of market

Market: A market is a mechanism by which buyers and sellers of a commodity interact is price and quantity.

Market forms or market structures:

There are two types of competition prevailing in the market:

(i) Perfect or pure competition

(ii) Imperfect competition

(i) Perfect or pure competition: There is said to be perfect competition when every purchaser and seller is so small relative to the entire market that he cannot influence the market price by increasing or decreasing his purchases or his output.

The characteristics of perfect competition:

(i) Large number of buyers and sellers.

(ii) Existence of homogeneous product.

(iii) Perfect knowledge about market.

(iv) Non existence of transport costs.

(v) Perfect mobility of factors of production.

(vi) Free entry and exit.

(ii) Imperfect competition: A market is said to be imperfect when some buyers or sellers or both are not aware of the offers being made by others.

Imperfect competition may also take several forms. e. g.

•           Monopolistic competition
•           Oligopoly competition
•      Duopoly or monopoly competition

The characteristics of Monopolistic competition:

(i) Existence of many firms.

(ii) Product differentiation.

(iii) Easy entry and exit.

(iv) Existence of selling cost.

(v) Control over the price.

Characteristics of oligopoly competition:-

(i) The sellers supply either homogeneous product or differentiated product.

(ii) Advertising and selling costs have strategic importance in an oligopoly market.

(iii) The per-dominant element of monopoly is present in oligopoly.

(iv) In economics oligopoly is known as cat mouse competition.

(v) The product under oligopoly contains high degree of cross elasticity of demand.

Characteristics of monopoly competition:

(i) In monopoly there should be only one seller in the market.

(ii) Monopolist has full control over the supply because he is alone in the market.

(iii) In monopoly from is in a position to determine the price in this way monopolist is price market.

(iv) In monopoly firm is in a position to earn abnormal profit.

(v) In monopoly the unity of product is homogeneous.