A market structure is the set of characteristics that determine the level of competition and pricing power within a market.
Competition
Competition is the effort of firms to attract customers and achieve their objectives.
2 types:
- Perfect Competition Also known as Pure Competition.
- Imperfect Competition
Markets where firms have some control over price because of factors such as product differentiation or a small number of competitors. Includes:- Monopolistic Competition
- Oligopoly
- Monopoly
Each are explained in depth on their own pages.
Market Power
The ability of a firm to increase price by reducing output without losing all its customers.
Barriers to Entry
Factors that make it difficult for new firms to enter a market.
Examples:
- High start-up costs
- Technological requirements
- Patents
- Control over important resources
- Legal restrictions
