Market Structure: Types, Determinants and Significance


Added on  2019-09-26

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MARKET STRUCTURE31st July 2019 In common assertion, market refers to a particular place where goods and services are purchasedand sold by manufacturers or produces at wholesale or retail prices. Thus, market is a place thatconsists of several small size shops and big shops, stalls and a number of hawkers sellingdifferent types of products and services. In a market there are two parties who use to facilitate theprocess associated with the exchange of product and services. Among these two parties, onestands as a seller and another one stands as a buyer. A market might be physical in form, like awholesale or retail outlet where people gather and communicated face-to-face and get involvedin purchase and sale, or virtual such as an online market where no physical contact establishedbetween the sellers and buyers but goods are exchanged. However, in Economics, market is notjust a particular place but it denotes a market which is solely associated with commodities. As per economic term, market refers to a specific arrangement whereby sellers and buyers comeclose and contact with each other indirectly or directly to buy and sell goods or services.Furthermore, it also says that for a market’s existence, sellers and buyers do not need to meetwith each other personally at a specific place and they might contact or communicate each otherby using any means of communication such as fax, telephone or mail. Thus, in economics‘Market’ is a term that used in a specialised and typical sense and it does not indicate a pre-fixedlocation. It indicates to the entire area of operating supply and demand. Again, it means theconditions as well as the commercial relationships between sellers and buyers those who areinvolved in facilitating transactions. Therefore, the term market signifies all kind ofarrangements in which purchase and sale of goods and services take place.Definition of Market and Market StructureAntoine Augustin Cournot, a French economist has defined market as not a particular place ofmarket from where things are sold out and bought but the entire area of a region where the sellers

and buyers involved in such intercourse with each other that the end prices of the same productsand services tend to easily, equality and quickly. This particular definition of market indicatessome essential points such as a market is not any specific place where sellers and buyers use toassemble but it might be an area or region which belongs to a particular country, state, district oreven the entire world from where sellers and buyers are drawn. There must be businessintercourse among the dealers, i.e., buyers and sellers. Along with this, another point rises whichsays that the buyers and sellers need to be in touch with each other to become aware of the pricesaccepted or offered by other sellers and buyers, and the same price rules the market during thesame thing same time. On the other side, as per some other definitions of market as provided by different scholarsmarket refers not only to a place but also to the commodities as well as the sellers and buyers ofcommodities who are involved in competition with one another directly. From differentdefinitions of market, some facts are identified that there are always some commodities exited ina market, sellers and buyers get in touch or communicate with each other either throughtelegraph, telephone, post, or through some middlemen, and there is always a perfect competitionexists among sellers and buyers and due to such competition, final or selling price ofcommodities get influenced. There are different types of market depending upon the degree ofcompetition, and the presence of buyers and sellers. Moreover, market structures are also basedon the nature of different markets.Market structure stands as a set of characteristics of a market either competitive or organizationalwhich describes the degree and nature of competition as well as the prevailing pricing policy in amarket. Thus, market structure referred to the number of companies producing similar productsand services and operated in a particular market and the structure of whom is determined as perthe prevailing competition in that particular market. Structure of a market indicates the practicesfollowed by market players i.e. the practices of the sellers and buyers present in a market.Major Determinants of Market StructureThere are some major determinants which decide the structure and formation of a market. These major determinants of a market structure are as follows –

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