CLASSIFICATION OF MARKET STRUTURE AND ITS IMPORTANCE

INTRODUCTION

In an economy, goods and services are produced for the ultimate satisfaction of the consumers. Therefore, all finished goods and services must be sold to the consumers. The process of exchange of these goods is essential. Thus, market is such a place where buyers and sellers gather in order to buy and sell a particular good or commodity. The term market refers not necessarily to a place but always to a commodity and the buyers and sellers who are not in direct competition with one another.

CLASSIFICATION OF MARKETS Generally, the determination of price and output depends on the type the market. In a market, the products are produced, sold and purchased. Therefore, the economists from time to time classified the various market structures on the basis of time, area and competition. Here we are going to see about Market Structures on the basis of Competition.
On the basis of competition a market may be of following types. * Perfect Competition * Monopoly * Duopoly * Oligopoly * Monopolistic competition

PERFECTLY COMPETITIVE MARKET
In a Perfectly Competitive Market we have a large number of small firms producing identical products. As the number is large, each firm has no market power. That is they are driven by their rivals to a common price and that will be the equilibrium price in the market. If you are an individual firm in this market your individual demand curve looks like

A horizontal line at the equilibrium market price P*. If you raise the price above the equilibrium price , you will lose your customer. They will go to the next company which offers an identical product at the equilibrium price. In such a market there are no barriers for entry and exit. Firms can start and stop business at will. So as long as someone is making positive profit ,