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Distinction Between Market and Market Structure and Its Implications for Managerial Decision Making

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DISTINCTION BETWEEN MARKET AND MARKET STRUCTURE AND IMPLICATIONS FOR MANAGERIAL DECISION MAKING
A market can be defined as a place or institutional arrangement which facilitates the interaction between buyers and sellers in a process that determines price and quantity sold. It can be a physical or virtual place and typically, the product being traded could be goods, service or information.
Market structure, on the other hand, refers to characteristics of a given market such as the size of the market, number of buyers and sellers, nature of product being sold, mode of pricing and nature of market information. The structure of any market has a great influence on the behaviour of buyers and sellers in the market and thus affects the performance of firms operating in the market and, as could be expected, the decision making activities of managers of the respective firms in their bid towards achievement of the traditional profit maximization objective of the firm.
There are four kinds of market structures that can be identified: Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly. We would examine the market structures and their effects on managerial decision making in turn.

Perfect Competition
Perfect competition is the idealized version of the market structure with existence of many buyers and sellers with free entry and free exit, homogeneity of the product sold, perfect mobility of resources or factors of production and perfect information among all market players. In this type of market, demand is perfectly elastic and each individual buyer or seller is so small relative to the market size that he or she has no power to influence the price. Each individual can only decide how much to buy or sell at the price determined by the market.
The profit maximising output for a firm is where marginal revenue equals marginal cost, and since in

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