Forms of Markets and Price Determination

A market is represented as a congregation place for two parties to allow the trade of services or products. The buyers and sellers are generally the persons involved. A market can have the physical form of a retail location, where vendors and buyers can meet face to face, or it can take the virtual shape of an online market, where buyers and sellers do not have direct physical contact. The term market is used in various contexts, such as the securities market or a regular physical market, where people gather to purchase and sell goods.

Different types of Markets 

It is the diversity of market arrangements that define an economy. These market structures refer to the degree of rivalry in a market. The nature of the commodities and product, the number of sellers, the number of customers, economies of scale, the nature of the product or service, and other factors influence market structures. 

Monopolistic Rivalry

This tournament is based on a real-life situation. There are a massive number of customers and sellers in monopolistic competition. The distinction is that they do not all sell the same things. Although the items are identical, each merchant offers something unique. Because the sellers have a strong position in this market system, they may demand determinants at a somewhat higher price.

Perfect Competition 

There are many consumers and merchants in a perfect competition market system, and each of them is fighting against the other. In the market, there is no central or dominant vendor. As a result, price takers are the sellers in this market. This type is also called a perfectly competitive market.

The Monopoly Game

There is a single seller in a monopolistic market structure. This single seller signifies that a single corporation will dominate the whole market structure. They can establish whatever predetermined price they want since they have unlimited market power. Shoppers have no alternative but to pay the merchant’s price. Monopolies are by far the most unfavourable market structure. Patrons lose all supremacy in this condition, and market forces become worthless. In reality, though, monopoly is uncommon.

Monopoly

Monopoly competition is a market structure where there is only one producer of goods or services. This producer can set the price for their product and keep all the profits. It is a disadvantageous market structure as it limits the number of sellers and causes long waiting times for customers. 

There are two primary forms of market and price determination under perfect competition in monopolising the market in monopoly competition: price leader and price taker. The producer sets the highest price in the price leader form and tries to maintain this by offering more outstanding quality to consumers than the other producers. The price taker form is when one producer dominates the monopoly economy and sets the lowest price. This producer can capture a larger share of the total market share because it can offer lower prices to consumers.

Oligopoly:

Oligopoly is a term for a kind of market where several companies or sellers keep certain homogeneous products or differentiated products captive. In other words, it can be said that an oligopoly is a state of the market where the industry is a collective of a few kinds of products or a few firms dominate the market or industry. This, in turn, affects a big parameter of the market that is costing. An individual firm can decide the cost of products, and their decision affects the markets. In an oligopoly, every individual firm has control over the market and its prices. To be up to the mark and ahead of the other firms, the individual firms compete with each other.

Monopsony:

A monopsony is a market configuration in which only one buyer, the monopsonist, exists. A monopsony, like a monopoly, also has an imperfect market state. The distinction between a monopoly and a monopoly is mainly based on the controlling business aspects. A single buyer dominates a monopolised market, whereas a single dealer dominates a monopolist market. Monopsonists are common in areas where they supply the majority of the employment in the local economy. For example, a firm that gathers all of a town’s labour. For example, a sugar plant that hires workers from all across the town to harvest sugarcane.

Conclusion :

Market forces in perfect competition regulate the whole market structure. In perfect competition, indistinguishable substances are supplied, and prices are determined by demand determinants and supply. Although market share is distributed evenly among all enterprises, purchasers have comprehensive knowledge about products and prices, and entrance and exit obstacles are minimal.