Operations Decisions

Market structure is a microeconomics term that encompasses the interconnected attributes of a market. The variables examined when considering market structure include characteristics of buyers and sellers, competition, product differentiation, and ease of moving into and from the market. Factors such as the number and strength of buyers and sellers, along with any collusion that may develop among them, are very influential on market structure, as evident in this discussion. An analysis of the competition will consider the occurrence and degree of product differentiation that is occurring. Finally, two important attributes of market structure are the ease of entry and exit from the existing market.

Traditionally, four fundamental market structure types are recognized: 1) Perfect competition, in which many buyers and sellers engage without being able to control prices; 2) Oligopoly, in which a number of large sellers have established some control over prices; 3) Monopoly, in which...
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