Analysis of Market Structures

Analysis of Market Structures Market structures define the different ways companies are structured within the marketplace. The different market structures are based on the characteristics of a market relative to the buyers and sellers and the relationship between them. Competition is another difference between the markets as is the capability of entering and exiting the market. Perfect competition is where many firms sell the same product and they have no control over the price of their product/service. They must charge the market price or buyers will buy a lower priced substitute. There are also many buyers of their product. Since there are many buyers and sellers and there is no control over the market price, there is total freedom of entry and exit in this market structure. While there is no true perfect competition, it gives us a point opposite of a monopoly in which to work from. Perfect competition is summed up with six basic assumptions: 1) large number of sellers/producers; 2) larger number of buyers; 3) homogeneous product; 4) free entry into and free exit out of the market; 5) perfect knowledge; and 6) there is easily moving in and out of the industry for buyers and sellers (Amacher however, they do not have the atmosphere of Biaggi’s and I am willing to pay the price to know that they can prepare my meal according to my specific needs.