power point presentation for market structure.pptx

market structure

1. Market structure PRESENTATION BY : HIMANSHI POKAR SAVITASHREE WASNIK HARDEEP SINGH

2. CONTENT INTRODUCTION TO MARKET IMPORTANCE OF MARKET STRUCTURE CLASSIFICATION OF MARKET STRUCTURE MARKET STRUCTURE COMPARISON MARKET STRUCTURE IN REAL WORLD MARKET STRUCTURE AND CONSUMER’S WELFARE GOVERNMENT REGULATION CONCLUTION

3. What is market?? Market structure refers to the organizational characteristics and features of a specific market, such as the number and size of firms, the degree of competition, the nature of products, and the ease of entry and exit. It helps categorize markets into different types, like perfect competition, monopoly, oligopoly, or monopolistic competition, based on these defining elements. Understanding market structure is essential for analyzing how markets operate, the behavior of firms within them, and their impact on consumers and the economy.

4. Importance of understand market structure Understanding market structure is essential for informed consumer choices, effective business strategies, and sound policy decisions. It promotes competition, protects consumers, and influences economic growth. It guides investment and trade policies, ensuring a balanced economic landscape and incentivizing innovation. In short, market structure knowledge is crucial for a well-functioning economy.

5. Classification of market structure

6. Local market In such a market the buyers and sellers are limited to the local region or area. They usually sell perishable goods of daily use since the transport of such goods can be expensive.

7. Regional market These markets cover a wider are than local markets like a district, or a cluster of few smaller states.

8. National market  This is when the demand for the goods is limited to one specific country. Or the government may not allow the trade of such goods outside national boundaries . • The same product or service is offered to customers who are spread around the country • A business may have several (or many) locations in the country in order to reach those customers • A start-up or small business can be focused on a national market, although it is likely that it will have a very small share of the market.

9. World market The system that allows commercial, financial and labor exchange between different countries without any type of restriction.

10. VERY SHORT PERIOD MARKET a market that lasts few hours or few days Example: fish, vegetables, milk, the market for flowers, Fruits etc.

11. SHORT PERIOD MARKET a market whereby supply can be changed to a limited extent in response to the change in demand. Example : cloths

12. LONG PERIOD MARKET a market whereby supply can be fully adjusted to the changes in demand. A firm can change its production capacity.

13. Very long period market a market whereby the tastes, habits of buyers can be changed and the supplier is in a position to change his production s and procedures to cope up with the every changing demand. It is slightly longer than long period market.

14. Perfect competition Large number of buyers and sellers Homogenous products {exactly same products are produced} Freedom entry and exit Perfect mobility of resources Perfect knowledge Absence of transportation cost

15. monopoly Single seller Absence of close substitutes Closed entry Price maker Probability of price discrimination

16. Monopolistic competition Large number of buyer and sellers Differentiated products Freedom of entry and exit Non price competition Selling cost {advertising cost} Independent price policy

17. oligopoly Few sellers Interdependence Intense competition Homogeneous or non homogeneous products Importance of selling cost Barrier to entry

18. monopsony Single buyer Specialized product Large number of sellers Lack of mobility Price maker T he Central Government is the sole buyer or monopolist when it comes to the domestic defense manufacturing sector.

19. Market structure in real world Perfect Competition Agricultural Markets: The agricultural industry often exhibits perfect competition. Many farmers produce homogeneous products like wheat or corn, and no single producer has significant control over the market price. Monopoly   Local Utilities: Many local utilities, like water or electricity providers, operate as monopolies in their respective regions. Consumers have no choice but to use their services due to high entry barriers. Oligopoly Automobile Industry: The global automobile industry is dominated by a few major players, such as Ford, Toyota, and Volkswagen. These firms have substantial market control and often engage in price and product differentiation strategies.

20. 4. Monopolistic Competition Restaurant Industry: The restaurant industry is a good example of monopolistic competition. There are numerous restaurants in any given area, each offering a slightly different dining experience, creating a competitive yet differentiated market. These examples demonstrate that the real world is not neatly categorized into one market structure; often, industries may have elements of multiple structures.

21. Market structure and consumer’s welfare Monopoly : Mixed impact, as high prices and limited choices can harm consumers, but monopolies might also invest in innovation. Oligopoly : Variable impact depending on firm behavior, from better products to price collusion. Perfect Competition : High consumer welfare due to low prices and abundant choices. Monopolistic Competition : A balance between variety and slightly higher prices, offering moderate consumer welfare. Overall, the impact of market structure on consumer welfare is not uniform and depends on factors such as competition, regulation, and the behavior of firms within the structure. In practice, various industries may exhibit characteristics of multiple market structures, making it essential for policymakers to strike a balance between encouraging competition and regulating monopolistic behavior to ensure consumer welfare.

22. Government Regulation Government regulation plays a crucial role in different market structures by ensuring fair competition, consumer protection, and economic stability. In competitive markets, regulations aim to prevent monopolies, promote market efficiency, and safeguard consumers from fraud. In monopolistic or oligopolistic markets, regulations can control anti-competitive behavior, such as price-fixing, to maintain fair prices and quality. In markets with externalities, like pollution, government regulation can internalize costs through taxes or emission limits. In less regulated markets, government intervention may be minimal, while heavily regulated markets, like utilities, require extensive oversight to ensure equitable access and pricing. Overall , regulation balances market forces and societal interests.

23. Conclusion In conclusion, market structure plays a crucial role in shaping the behaviour of firms, the level of competition, and ultimately, the outcomes for consumers and the economy. There are various market structures, including perfect competition, monopolistic competition, oligopoly, and monopoly, each with its own characteristics and implications. The choice of market structure can have significant impacts on pricing, innovation, product diversity, and overall market efficiency. Understanding market structure is essential for policymakers, businesses, and consumers to make informed decisions and ensure that markets operate in a manner that aligns with their objectives and values.