Controlling Function of Management
Markets and Market Structure
One of the crucial elements to understanding how a market will function (though it will not explain everything) is its market structure. These are the key elements that determine the behavior of firms in the market and the outcome that will be produced by the market. One way of considering the market structure is to talk about the conditions that exist in the market. These conditions fall into (approximately) four categories: • Actors in the market (both numbers of actors and the sizes of these actors • The entry conditions (which includes the exit conditions) • Information characteristics of the market • Product characteristics
Taken together, these factors provide a useful picture of a market, revealing how it is likely work and the results that one would observe in this market. We will examine a number of different theoretical market structures that help us understand the nature of actual markets.
Three of these are of significant interest to us, both from the standpoint of understanding the way that different types of markets operate, but also how this relates to interactions that arise within the legal system. These three types of market types or structures are:
1. Perfect Competition
2. Monopoly
3. Oligopoly
This document only introduces each of these types and gives a basic description of their characteristics and the type of outcome one can expect in each of these types of markets. Separate materials are available to provided a more detailed discussion of each of these different structures.
The first of these is the perfectly competitive market.
Perfect Competition
The outcome of this market structure is a situation in which firms (as well as consumers) act as price takers. This condition results from the circumstances that exist in these markets, with respect to the categories described above. As they apply to the competitive market, these conditions are:
1. Many buyers and
One of the crucial elements to understanding how a market will function (though it will not explain everything) is its market structure. These are the key elements that determine the behavior of firms in the market and the outcome that will be produced by the market. One way of considering the market structure is to talk about the conditions that exist in the market. These conditions fall into (approximately) four categories: • Actors in the market (both numbers of actors and the sizes of these actors • The entry conditions (which includes the exit conditions) • Information characteristics of the market • Product characteristics
Taken together, these factors provide a useful picture of a market, revealing how it is likely work and the results that one would observe in this market. We will examine a number of different theoretical market structures that help us understand the nature of actual markets.
Three of these are of significant interest to us, both from the standpoint of understanding the way that different types of markets operate, but also how this relates to interactions that arise within the legal system. These three types of market types or structures are:
1. Perfect Competition
2. Monopoly
3. Oligopoly
This document only introduces each of these types and gives a basic description of their characteristics and the type of outcome one can expect in each of these types of markets. Separate materials are available to provided a more detailed discussion of each of these different structures.
The first of these is the perfectly competitive market.
Perfect Competition
The outcome of this market structure is a situation in which firms (as well as consumers) act as price takers. This condition results from the circumstances that exist in these markets, with respect to the categories described above. As they apply to the competitive market, these conditions are:
1. Many buyers and