In business studies,the concept of market structures is much more relevant to the revenue.As the business enterprises aims to have maximum revenues they have to has the complete knowledge of the market in which they are running their organizations.
Market structure differes on the basis of the no of the firms or organizations operating in the market and their corresponding competition and also the kind of product they are producing, the no or kind of buyers of the product, on the degree of flow of informations and also on the extent of mobility of entry and exit.
Strategic Business
Basically there are four types of market structures:
- Perfect competition
- Imperfect competition
- Oligopoly
- Monopoly
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Perfect competition
Characterized by a large no of buyers and sellers, homogenous product,perfect knowledge and freedom of entry and exit i.e perfect mobility.As the sellers cant affect the prices they are price takers so, the firms cant be able to earn supernormal profits in the long run while a few can earn in the short run but it would be temporary.
Imperfect competition
This also features many buyers and sellers,imperfect mobility, but the product may be differentiated due which the sellers might have a control over the prices which may lead towards a little bit monopoly.So, the firms can earn supernormal profit in the short run as well long run but it does not persist forever.
Oligopoly
There exists a competition among few firms that have differentiated products with non price competition.Firns are interdependent, entry is blocked while the firms face kinked demand curve.So, the firms can earn abnormal profits while keeping price stable by collusion among firms.
Monopoly
There is only one firm which is the single supplier of a product thus forming the entire industry.As there is no rival so the firm has the complete control over the price and also earns abnormal profit.
Monopoly can be categorized into natural monopoly, price discrimination,monopsony.
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