Classification of branch markets and types of market structures. And the classification of market structures

The market economy is a complex and dynamic system, with many connections between sellers, buyers and other participants in business relations. Therefore, markets, by definition, cannot be homogeneous. They differ in a number of parameters: the number and size of firms operating in the market, the degree of their influence on the price, the type of goods offered, and much more. These characteristics define types of market structures or otherwise market models. Today it is customary to distinguish four main types of market structures: pure or perfect competition, monopolistic competition, oligopoly and pure (absolute) monopoly. Let's consider them in more detail.

The concept and types of market structures

Market Structure- a combination of characteristic industry features of the organization of the market. Each type of market structure has a number of characteristics that are characteristic of it, which affect how the price level is formed, how sellers interact in the market, and so on. In addition, the types of market structures have varying degrees of competition.

Key characteristics of types of market structures:

• the number of sellers in the industry;
• firm sizes;
• number of buyers in the industry;
• type of goods;
• barriers to entry into the industry;
• availability of market information (price level, demand);
• the ability of an individual firm to influence the market price.

The most important characteristic of the type of market structure is level of competition, that is, the ability of a single seller to influence the general market situation. The more competitive the market, the lower this possibility. Competition itself can be both price (change in price) and non-price (change in the quality of goods, design, service, advertising).

Can be distinguished 4 main types of market structures or market models, which are presented below in descending order of the level of competition:

• perfect (pure) competition;
• monopolistic competition;
• oligopoly;
• pure (absolute) monopoly.

A table with a comparative analysis of the main types of market structures is shown below.

Table of the main types of market structures

Perfect (pure, free) competition

perfect competition market (English "perfect competition") - characterized by the presence of many sellers offering a homogeneous product, with free pricing.

That is, there are many firms on the market offering homogeneous products, and each selling firm, by itself, cannot influence the market price of this product.

In practice, and even on the scale of the entire national economy, perfect competition is extremely rare. In the 19th century it was typical for developed countries, but in our time, only agricultural markets, stock exchanges or the international currency market (Forex) can be attributed to markets of perfect competition (and even then with a reservation). In such markets, a fairly homogeneous product (currency, stocks, bonds, grain) is sold and bought, and there are a lot of sellers.

Features or conditions of perfect competition:

• number of sellers in the industry: large;
• size of firms-sellers: small;
• goods: homogeneous, standard;
• price control: none;
• barriers to entry into the industry: practically absent;
• competitive methods: only non-price competition.

Monopolistic competition

Monopolistic competition market (English "monopolistic competition") - characterized by a large number of sellers offering a diverse (differentiated) product.

In conditions of monopolistic competition, entry to the market is fairly free, there are barriers, but they are relatively easy to overcome. For example, in order to enter the market, a firm may need to obtain a special license, patent, etc. The control of firms-sellers over firms is limited. The demand for goods is highly elastic.

An example of monopolistic competition is the cosmetics market. For example, if consumers prefer Avon cosmetics, they are willing to pay more for it than for similar cosmetics from other companies. But if the price difference is too big, consumers will still switch to cheaper counterparts, such as Oriflame.

Monopolistic competition includes the food and light industry markets, the market for medicines, clothing, footwear, and perfumery. Products in such markets are differentiated - the same product (for example, a multi-cooker) from different sellers (manufacturers) can have many differences. Differences can manifest themselves not only in quality (reliability, design, number of functions, etc.), but also in service: the availability of warranty repairs, free shipping, technical support, payment by installments.

Features or features of monopolistic competition:

• number of sellers in the industry: large;
• size of firms: small or medium;
• number of buyers: large;
• product: differentiated;
• price control: limited;
• access to market information: free;
• barriers to entry into the industry: low;
• competitive methods: mainly non-price competition, and limited price.

Oligopoly

oligopoly market (English "oligopoly") - characterized by the presence on the market of a small number of large sellers, whose goods can be both homogeneous and differentiated.

Entry into the oligopolistic market is difficult, entry barriers are very high. The control of individual companies over prices is limited. Examples of an oligopoly are the automotive market, the markets for cellular communications, household appliances, and metals.

The peculiarity of an oligopoly is that the decisions of companies about the prices of a product and the volume of its supply are interdependent. The situation on the market strongly depends on how companies react when the price of products is changed by one of the market participants. Possible two kinds of reactions: 1) follow reaction- other oligopolists agree with the new price and set prices for their goods at the same level (follow the initiator of the price change); 2) reaction of ignoring- other oligopolists ignore price changes by the initiating firm and maintain the same price level for their products. Thus, an oligopoly market is characterized by a broken demand curve.

Features or oligopoly conditions:

• number of sellers in the industry: small;
• size of firms: large;
• number of buyers: large;
• goods: homogeneous or differentiated;
• price control: significant;
• access to market information: difficult;
• barriers to entry into the industry: high;
• competitive methods: non-price competition, very limited price competition.

Pure (absolute) monopoly

Pure monopoly market (English "monopoly") - characterized by the presence on the market of a single seller of a unique (having no close substitutes) product.

Absolute or pure monopoly is the exact opposite of perfect competition. A monopoly is a one-seller market. There is no competition. The monopolist has full market power: it sets and controls prices, decides how much goods to offer to the market. In a monopoly, the industry is essentially represented by just one firm. Barriers to market entry (both artificial and natural) are virtually insurmountable.

The legislation of many countries (including Russia) fights against monopolistic activity and unfair competition (collusion between firms in setting prices).

Pure monopoly, especially on a national scale, is a very, very rare phenomenon. Examples are small settlements (villages, towns, small towns), where there is only one shop, one owner of public transport, one railway, one airport. Or a natural monopoly.

Special varieties or types of monopoly:

• natural monopoly- a product in an industry can be produced by one firm at a lower cost than if many firms were engaged in its production (example: public utilities);
• monopsony- there is only one buyer in the market (monopoly on the demand side);
• bilateral monopoly- one seller, one buyer;
• duopoly– there are two independent sellers in the industry (such a market model was first proposed by A.O. Kurno).

Features or monopoly conditions:

• number of sellers in the industry: one (or two, if we are talking about a duopoly);
• company size: various (usually large);
• number of buyers: different (there can be both a multitude and a single buyer in the case of a bilateral monopoly);
• product: unique (has no substitutes);
• price control: full;
• access to market information: blocked;
• barriers to entry into the industry: virtually insurmountable;
• competitive methods: absent as unnecessary (the only thing is that the company can work on quality to maintain the image).

Galyautdinov R.R.

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The basis for classification is the degree of market competitiveness (the firm's ability to influence the market and, above all, prices).

Types of market structures:

I. Pure (perfect, absolute) competition. competitive market is a market where neither the size of firms producing identical products, nor other reasons allow any of the firms to influence the market price. Fluctuations in the price of a product are the result of the interaction of supply and demand, and not the result of the actions of individual sellers. The demand for an individual firm's product does not change when its supply changes. There will be changes only if the increase / decrease in output affects this market as a whole. The market price in the perfect competition model is the independent variable. The choice of firm is reduced to the decision on the volume of output. The model of perfect competition is equilibrium (that is, there are no inflation, unemployment, overproduction). The firm in this market is price taker.

Characteristics:

1) Many small firms.

2) Absolute mobility of material, financial, labor and other factors of production.

3) Complete freedom of entry and exit from the market (the entry-exit price in the industry is zero).

4) Free and equal access to full information of all participants. Full awareness of all participants in the competition about market conditions means that all conditions have been created for a rational choice in a strict form. Full awareness means that:

· Buyers and sellers have a complete understanding of supply and demand, know the prices of factors of production and finished products in all sectors of the market, and act in accordance with price signals.

The profit margins of firms operating in the industry are known to all potential competitors.

5) Homogeneous products.

6) Volumes of production and supply from individual producers make up an insignificant share of the total output. No participant in the free competition market can influence the decisions made by other participants. Since the number of market entities is large, the value of each individually is negligible.

II. Pure monopoly. In the case of a pure monopoly, the boundaries of the firm expand to the scale of the market for this product (the volume of output of the firm coincides with the volume of demand for this product). Therefore, the output of a monopoly firm is similar to the output of an industry under conditions of perfect competition. The demand curve for a monopolist's product is the market demand curve for that product. The firm in this market is price finder.

Characteristics:

1. In the industry - the only manufacturer.

2. The manufactured product has no substitutes. The product produced is homogeneous and unique.

3. Insurmountable barriers to entry and exit from the industry.

4. Restrictions on information.

5. The price is set by the firm.

III. Monopolistic competition. Based on product differentiation (real or imaginary). In an environment where many small firms produce heterogeneous products and each firm has a monopoly in its own tiny market, the firm is able to set the price largely independently.

Characteristics:

1. A large number of relatively small firms.

2. Diverse products.

3. No entry and exit barriers.

4. Some difficulties in access to information.

IV. Monopsony. Market with one buyer (buyer monopoly). Example: the only enterprise-employer in a given locality acts as a monopsonist in the labor market.

V. Bilateral monopoly. A market situation in which a single seller is opposed to a single buyer. Most often found in the labor market: the confrontation between a monopsonist employer and a monopolist trade union.

VI. Duopoly. Monopoly of two firms.

VII. Oligopoly. The predominant part of the products in this market is produced by a small number of large firms.

Characteristics:

1. A small number of relatively large firms.

2. Products are heterogeneous ( differentiated oligopoly) or homogeneous ( pure oligopoly).

3. Separate barriers to entry and exit from the industry. For example: the amount of start-up capital, access to the latest technology, etc.

4. Some restrictions on access to information.

Market functions:

1. Information.

2. Intermediary.

3. Pricing.

4. Regulatory.

5. Sanitizing.

Through the market mechanism is the optimal distribution of the main factors of production. The chain is as follows: an increase in demand for a product ð an increase in prices for it ð a revival of production ð an increase in demand for factors of production from a given industry and an increase in prices for them ð the overflow of factors of production into this industry ð an increase in the supply of goods and an excess of supply over demand ð overstocking and a decrease in prices for goods ð the outflow of factors of production from the industry. As a result of the described processes, the structure of distribution of factors of production comes into line with social needs.

The market mechanism stimulates scientific and technological progress. Firms using the latest machinery and technology seek to reduce the individual costs of production factors to a level below the prevailing market price and thus receive additional profit, which they can use to expand and further improve production. In a competitive race, the winner is the one whose costs are lower. This is a significant incentive for introducing the latest scientific and technical developments into production.

The market differentiates the income of market entities. Income differentiation is an objective result of the price mechanism. Depending on whether the producer's costs are higher or lower in relation to the price, the latter lose or make a profit. Weak firms fail and leave the market. Strong - expand their production.

The market structure is a combination of various forms, methods, features that can characterize the market activity of a particular market sector.

Concepts about market structures

Market structures develop in parallel with the market, they differ in that within each of them their own type and model of competition dominates. It should be noted that in market relations there can be no monopoly or its less pronounced manifestation. In view of this, the Russian state has issued laws to prevent the emergence of monopolistic structures that impede the development of market structures.

Definition 1

The market structure is understood as a whole system of signs and features that characterize the organization of the work of a particular industry market.

Today, competition is the main condition for the functioning of the market, every year the competition increases, which leads to the search for new opportunities for the company. In view of this, companies are looking for new market structures with the least degree of competition in order to have the opportunity to influence the market and its structure.

The development of market structures is impossible under a monopoly system. But, one way or another, they are formed and hinder the development of the market and economic relations within it.

Directions for improving market structures

There are several directions for the development of market structures:

• Ridding the market of illegal private property. Market structures will not be able to fully develop until there is a redistribution of property, since often the owners are the monopolists of the market, which is contrary to the legislation of the country. It should be noted that most often the property of monopolists was obtained dishonestly during perestroika;
• Improvement of antimonopoly legislation. In our country, there is legislation that prohibits the formation of a monopoly in today's market. But it should be noted that monopolies both existed and still exist, moreover, there are trends in the development of monopoly companies. The state, in turn, is not guided by the law, and it also has a number of shortcomings, quite serious, which does not allow punishing monopolists and reducing their activities;
• Lower barriers to entry into new markets. This circumstance hinders the development of market structures, since only a limited number of companies can enter the market, since for the rest the entry barrier is considered too high and unattainable. The reasons for barriers can be different circumstances: high tax rates, rigid framework for doing business, pressure from monopolists, etc.

Remark 1

The improvement of market structures is a necessary condition for the successful and efficient functioning of the market. The development of structures will make it possible to improve competitive relations within the market, create favorable conditions for the work of companies, make the manufactured goods more competitive and of higher quality, etc.

Classification of market structures

Market structures are formed within the market, which can be described in two main types:

1. A market dominated by perfect competition;
2. A market dominated by imperfect competition.

Market structures are also classified according to the types of market:

• Perfectly competitive market structures. This type of competition in market structures implies: a large number of companies (small and medium-sized businesses), there are no places for large companies in such competition; all manufactured products within the structure are homogeneous, that is, there is no product differentiation; any company can occupy a niche in this market structure without interference and obstacles; all companies can equally have access to information about the market, consumers, competitors' prices, etc. This kind of competition in the market is ideal. In modern market conditions, there is practically no such competition in market structures, only in very limited structures;
• Imperfect competition of market structures. In this case, if at least one sign and element of perfect competition is violated, then automatically the competitive market structure becomes imperfect.

It should be noted that most often in economic terms, perfect competition is also called pure monopoly. Pure monopoly of market structures. In this case, the market structure is dominated by producers - monopolists who have no competitors, produce goods in accordance with their views and preferences. In such structures, consumers almost do not play a role, since demand has little effect on supply, on the contrary, the manufacturer himself determines in what volume, at what cost and how to sell his product to the market. This type of competition in our market structures is almost absent, it exists in certain industries and not in its pure form, since the market of our country is competitive. The characteristic of perfect competition is also shown in the figure:

Figure 1. Perfect competition. Author24 - online exchange of student papers

In addition to pure monopoly, oligopoly can also arise in market structures, when only a few firms operate on the market at a certain moment, that is, a limited number. In this type of competition, market structures are dominated by a large number of firms on the market, but all of them are not dominant, since there are companies - concerns or syndicates that dictate "their own rules" of the game, since all other firms do not compete for them, but only "survive" in the created market conditions. In real conditions, oligopoly is a frequent occurrence among market structures, the most negative thing is that the growth of oligopoly continues, and the state does not take any measures to curb this trend. The characteristic of an oligopoly is also shown in the figure:

Monopolistic competition. In this case, market structures are endowed with a sufficiently large number of firms in the market, where each has its own small share of the monopoly.

Monopsony is also called a market structure where there is only one buyer for the entire market.

Depending on the conditions for the flow of competition, stable formations arise that differ from each other in the number and size of participants, the nature of the products that are produced, and the conditions for entering the market.

These formations are called market structures. The most typical and common of them are the following:

Perfect competition is a market in which numerous manufacturers, who freely enter and leave it, offer a product to numerous buyers. Each producer, being a very small part of the total output, does not affect the price, which is set under the influence of supply and demand.

If these conditions are violated, then competition becomes limited (or imperfect). Imperfect competition includes such structures: monopoly, oligopoly and monopolistic competition (Table 2.1).

Monopolistic competition - a common type of market, closest to perfect competition, involves a large number of sellers who offer heterogeneous products to numerous buyers. Entry into such a market is relatively simple, each firm takes its own place, secures its own group of buyers using non-price competition (advertising, trade mark, company name, etc.), sets prices in the range used by other firms. The difference lies in the fact that under perfect competition, products are homogeneous (standardized), and under monopolistic competition, products are differentiated.

Imperfect competition prevails in those markets where producers can influence the market price by raising or lowering it.

An oligopoly is a market characterized by a small number of large firms that sell homogeneous or dissimilar products to numerous buyers. Such firms have the ability to harmonize their production and trade policies, control the market and prevent new firms from entering it. In an oligopoly, pricing is interdependent and depends on the actions of competing firms.

Table 2.1 - Characteristics of the main market models

There are several other types of competition in an imperfectly competitive market: monopsony, oligopsony, duopoly, bilateral monopoly.

A monopsony is a type of market structure in which there is only one buyer for a given good in the market.

Oligopsony is a type of market structure in which there is a small, highly specialized group of buyers for a particular product.

A duopoly is a type of market structure in which there are only two suppliers of a certain product and there are no monopolistic agreements between them on prices, markets, etc.

A bilateral monopoly is a type of market structure in which there is a confrontation between a single supplier and a single consumer. Such a market arises in the market for electricity, water and gas supply.

Building an efficient national economy provides for the creation of legal foundations for limiting monopoly, preventing unfair competition in business activities and exercising state control over compliance with antimonopoly legislation.

The market has a complex structure, covering all spheres of the economy with its influence.

The structure of the market is the internal structure, location, order of individual elements of the market.

We can name the following features of the market structure: close ties between its elements; a certain stability of these links; integrity, the totality of these elements.

The market covers elements directly related to the provision of production, as well as elements of material and monetary circulation. The presence of various forms of ownership and management, features of the sphere of commodity circulation, the level of denationalization and privatization, and other factors have a significant impact on the market. It is also connected with the non-productive sphere and even with the spiritual sphere (the area of ​​paid sale of products of intellectual activity of scientists, writers, artists, etc.). All this determines the complex structure of the market, the diversity of its types and types.

The totality of all markets, divided into separate elements on the basis of various criteria, forms a system of markets.

In the economic literature, more than a dozen criteria are distinguished for characterizing the structure and system of the market, its classification. Let's consider some of them.

• According to the economic purpose of objects of market relations:
  • Market of goods and services (consumer market);
  • Stocks and bods market;
  • Labor market (labor market);
  • Market and currencies;
  • information market;
  • Market of scientific and technical developments (patents, know-how licenses), etc.
• By product groups:
  • Markets for industrial goods;
  • Markets for consumer goods (for example, food);
  • Raw materials markets, etc.
• By geographic location:
  • Local (local) markets;
  • Regional markets;
  • national market;
  • World market.
• By subjects or their groups:
  • buyers market;
  • Sellers market;
  • Market of public institutions;
  • The market of intermediate sellers - intermediaries, etc.
• According to the degree of restriction of competition:
  • Monopoly market;
  • Oligopolistic market;
  • Market of monopolistic competition;
  • Perfect competition market.
• Saturation level:
  • Equilibrium market;
  • Scarce market;
  • Excess market.
• By degree of maturity:
  • Undeveloped market;
  • Developed market;
  • Emerging market.
• According to the law:
  • Legal (official) market;
  • Illegal, or shadow, market ("black" and "gray").
• By nature of sales:
  • Wholesale market;
  • Retail market.
• By the nature of the product range:
  • A closed market where only the products of the first manufacturer are presented;
  • A saturated market with many similar products from many manufacturers;
  • A wide range market in which there are a number of types of goods related to each other and aimed at satisfying one or more related needs;
  • A mixed market in which there are a variety of goods that are not related to each other.
• By industry:
  • car market;
  • oil market;
  • Computer equipment market, etc.

In the market structure, the following types of markets are also highlighted:

• Markets for goods and services, which includes markets for consumer purposes, services, housing and buildings for non-industrial purposes.
• Factor markets, which include markets for real estate, tools, raw materials, energy resources, minerals.
• Financial markets, those. capital markets (investment markets), credit, securities, currency and money markets.
• Smart Product Markets, where innovations, inventions, information services, works of literature and art act as objects of sale.
• labor markets, representing an economic form of movement (migration) of labor resources (labor).

In real practice, the main types of markets are divided into various sub-markets, or market segments. Market segmentation is the division of consumers of a given product into separate groups that impose different requirements on the product. Market segmentation can be done in different ways using different factors.

Firstly, taking into account geographical factors, consumer groups can be distinguished by regions, administrative divisions, population density, and climatic conditions.

Secondly, based on demographic factors, it is possible to group consumers by age, gender, family size, income level, occupational composition, educational level, religious affiliation, national composition.

Thirdly, taking into account the behavior of various consumer groups, the following market segments can be distinguished: a) the purchase of goods is random; b) search for benefits when buying goods; c) the status of a regular customer; d) emotional (positive, negative, indifferent) attitude to the product.

Fourth, consumers can also be divided into groups according to social composition (with varying degrees of income), lifestyle (elitist, youth, sports, etc.), personal qualities (ambitious, authoritarian, impulsive).

Types and types of markets are not isolated, but are inextricably linked and exist as a single market system, all elements of which are in certain relationships with each other. The role of these ratios and proportions is exceptionally great.

A civilized market presupposes the presence of a developed infrastructure that ensures its efficient functioning.

For the first time the term "infrastructure" was used in economic analysis to refer to objects and structures that ensure the viability of the armed forces (early twentieth century). In the 1940s in the West, infrastructure began to be understood as a set of industries that serve the normal functioning of material production.

For the normal functioning of the market, a well-organized work of various specialized institutions, enterprises, organizations and services is necessary. The system of such institutions, enterprises, organizations and services that ensure the movement of goods and services is a market infrastructure.

Market infrastructure is defined in different ways:

• as a complex of elements, institutions and activities that create organizational and economic conditions for the functioning of the market;
• as a set of institutions, organizations, state and commercial enterprises and services that ensure the normal functioning of the market;
• as a set of market institutions that serve and ensure the movement of goods and services, capital and labor.

In general, infrastructure can be defined as a set of institutions, systems, services, enterprises and organizations that serve the market and perform certain functions to ensure its normal functioning.

The main elements of the market infrastructure in modern conditions are:

The infrastructure is designed to ensure the civilized nature of the activities of market entities, its elements are not imposed on entities from the outside, but are generated by market relations themselves.

The main functions of the market infrastructure include:

• making it easier for participants in market relations to realize their interests, saving money and reducing costs in the course of various operations;
• increasing the efficiency and effectiveness of the work of market entities based on the specialization of individual economic entities and types of activities;
• organizational design of market relations;
• facilitation of legal and economic control, state and public regulation of economic activity.