WELCOME TO

THIS PRESENTATION

PRESENTATION ON

MARKET STRUCTURE

By Md. Ashikollah ID: 51427032 27th Batch, EMBA

Market Structure

Market structure – identifies how a market is made up in terms of:The number of firms in the industryThe nature of the product producedThe degree of monopoly power each firm hasThe degree to which the firm can influence pricePricing strategiesBarriers to entry and exit.

Types of Market Structure

Perfect Competition Monopolistic

Competition Oligopoly Monopoly

Perfectly Competitive Market

• Less market power

• Price takers• Goods are

homogenous

• Free entry and exit

• Perfect Information

Monopolistic Competition

• Many firms• Free entry

and exit• Differentiat

ed but highly substitutable product

Oligopoly• Small

number of firms

• Product differentiation may or may not exist

• Barriers to entry

Monopoly• There is

market power

• Single seller

• One product (limited or no good substitutes)

• Barriers to entry

Types of Market Structure

Competition and the Market Structure

Price Control and the Market Structure

Perfect Competition

Large number of buyers and sellers – no individual seller can influence price

Perfect information available to buyers and sellers Sellers are price takers – have to accept the market price Homogenous product – identical so no consumer

preference and The products of all firms are perfect substitutes

Example-Agricultural products

Free entry and exit to industry

Perfect Competition

Pricing Strategy : Going Rate Pricing Competitor Indexing Penetration Pricing

Monopolistic Competition

Monopolistic-Many buyers and sellers

Products differentiated only due to branding

Each firm may have a tiny ‘monopoly’ because of the differentiation of their product

Firm has some control over priceRelatively free entry and exit Examples – Restaurants, Retailing etc

Pricing Strategy:Psychological PricingPenetration pricing Premium pricing

Monopolistic Competition

Oligopoly – Competition amongst the few

Industry dominated by small number of large firms

Many firms may make up the industryProducts could be highly differentiated –

branding or homogenousNon–price competitionHigh degree of interdependence between firmsHigh barriers to entry

Oligopoly

Pricing Strategy :

Competitor Indexing Cost-Plus pricing Differential pricing Loss Leadership Pricing Product Bundling Predatory pricing

Oligopoly

The barriers to entry are:

1. Natural Scale economies Patents Technology Name Recognition

2. Strategic Action Flooding the market Controlling an essential input

Oligopoly

Examples of oligopolistic structures:SupermarketsBanking industryChemicalsOilMedicinal drugsBroadcasting

Oligopoly

Monopoly – Single sellerA large number of buyersProduct does not have any close substitute Firm controls price OR output/supplyAbnormal profits in long runPossibility of price discriminationConsumer choice limitedPrices in excess of MCHigh barriers to entry

Monopoly

Example of Monopoly-

Electricity ,Railway

Pricing Strategy :Cost-Plus Pricing strategyPrice SkimmingValue-based pricing

Monopoly

Barriers to entry Control of Inputs Economies of scale Patents Licenses/Franchises Barrier to Exit Government intervention

Monopoly

Any Question?

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