Types of Market

In this blog i will discuss various types of markets .
Market: Market is a place where buyers and sellers meet for the purpose of exchange of goods. It refers to a wide range of area or a platform where the buyers and sellers come into close contact with one another for the settlement of their transactions.
Broadly there are 5 types of market structure:
1.) Perfect competition
2.) Monopolistic competition
3.) Oligopoly
4.) Duopoly
5.) Monopoly

1.) Perfect competition:
A perfectly competitive market is one in which the number of buyers and sellers are very large, all engaged in buying and selling a homogenous product.
Features of a perfectly competitive market:
Large number of buyers and sellers
Homogenous products
Free entry and exit of firms
Firms are price-takers
Sellers and buyers have perfect knowledge of the firms.

For e.g.,stock markets, currency markets are the appropriate example of perfectly competitive market.

2.) Monopolistic competition:
It is a market structure in which a large numberof small sellers sell differentiated products which are close, but not perfect substitutes for one another. Most of the industries fall under this market structure.

E.g., close-up and colgates both are close but not perfect substitute for each other. Both are similar products i.e., toothpaste but not identical. At least the brands through intensive advertisement makes us feel that it is different from other brand.

Builders, restaurants fall under this type of market structure.

3.) Oligopoly:
Under oligopoly, there are few sellers selling identical or differentiated products.
These firms are large in size, are capital intensive, have huge economies of scale.
This type of market structre has high entry barriers.
The decision of a firm is influenced by the rival's decision.
E.g., cement, automobile, electrical appliances, banking, telecom, B2B market falls under oligopoly.

4.) Duopoly:
Duopoly is a market with two sellers exercising control over the supply of commodities. It is a two firm industry.
It is a special case of oligopoly.
There is a cut-throat competition between two rivals to eliminate the other from the market and setting himself as a monopolist.

E.g., Intel and AMD

5.) Monopoly:
Monopoly is a market form in which a single producer controls the whole supply of a single commodity which has no close substitutes.
There is only one seller selling a unique product. The entry is strictly restricted or completely blocked.

E.g., Indian railways is a perfect example of monoply. Even in atomic energy the government has complete monopoly.

Other examples of monopoly are local water company, train operators over particular routes etc.