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2281 · 3.8

Market structure

**Market structure** (3.8) compares **competitive markets** with **monopoly**. Paper 2 often asks you to explain the differences in price, output and choice, then to discuss whether a monopoly is always bad for consumers (3.9).

Need to know

What you need to know

  • Market structure is determined by the number of firms, barriers to entry, and product type.
  • The spectrum of competition ranges from perfect competition (most competitive) to pure monopoly (least competitive).
  • A firm's behaviour and performance are heavily influenced by the structure of the market it operates in.
  • Most real-world markets are imperfectly competitive (monopolistic competition or oligopoly).

Explanation

Market structure

  1. Market structure is determined by the number of firms, barriers to entry, and product type.
  2. The spectrum of competition ranges from perfect competition (most competitive) to pure monopoly (least competitive).
  3. A firm's behaviour and performance are heavily influenced by the structure of the market it operates in.
  4. Most real-world markets are imperfectly competitive (monopolistic competition or oligopoly).
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