A market is a place or process that brings buyers and sellers together to agree on a price that leads to an exchange of goods or services. There are different types of markets that are defined and categorised based on various factors, which develop market structure:
“The interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market.” (Web Finance Inc. 2014)
Most of the markets will have competition of a sort, higher or lower than other, but competition nonetheless. For instance, the most imperfectly competitive market is oligopolistic market where the market is dominated by a small number of large firms producing most of the output in the industry, whilst a very large number of small firms will be rather unimportant. The market is hard to enter. Whilst the perfect competition market is easy to enter because it consists of mostly small independent firms that sell the same goods/services with none of them large enough to dominate the market. On the other hand, monopoly will have no significant competition as it only exists in a market with one supplier. Because of this the market is considerably hard to enter.
The type of the market affects the price setting in the industry. The perfect competition market heavily relies on the competition of price whilst in oligopoly market the price is not always the most important factor in order to stay competitive. Other factors like marketing mix (4 P’s) and the branding could potentially be more significant. Whilst monopoly market will not be influenced...
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