Knowra Market structure Market structure Market structure describes how a market is organized by the number and relative size of buyers and sellers, barriers to entry, and the relationships among firms.
Market power : A firm’s ability to influence market prices or other terms of exchange. Market structure shapes how much influence individual sellers can exert.
Perfect competition : An idealized market with many sellers, identical products, and free entry and exit. It is the benchmark in which individual sellers have no control over market price.
Cournot competition : An oligopoly model in which firms choose output quantities while treating rivals’ quantities as given. It captures how a small number of sellers can jointly shape market output.
Market conduct : The pricing, production, advertising, and strategic decisions firms make in a market. Conduct is how firms act within a structure, not the structure itself.
Barriers to entry : Obstacles that make it difficult or costly for new firms to enter a market. Entry barriers help determine whether existing firms face new competition.
Monopolistic competition : A market form with many sellers offering differentiated products and relatively easy entry. It combines numerous rivals with limited pricing power from product differences.
Bertrand competition : An oligopoly model in which firms choose prices while treating rivals’ prices as given. Price-setting choices can produce very different outcomes from quantity-setting choices.
Market performance : The outcomes a market produces, including prices, efficiency, innovation, and product quality. Performance is an outcome used to assess market organization rather than a structural feature.
Product differentiation : The ways firms make products seem distinct to buyers, whether through features, branding, or service. Differentiation can give sellers pricing latitude even when rivals are numerous.
Oligopoly : A market dominated by a small number of firms whose decisions affect one another. A few large sellers make strategic interdependence central to this structure.
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