Market Structure

Market Structure refers to the features of market, including the number of firms in the market, the distribution of market shares between them, product uniformity across firms, how easily it is for firms to enter and exit the market, and forms of competition in the market. A market structure can have several types of interacting market systems. Different forms of markets are a feature of capitalism and market socialism, with advocates of state socialism criticizing markets and aiming to substitute or replace markets with varying degrees of government-directed economic planning.

Competition acts as a regulatory mechanism for market systems, with government providing regulations where the market cannot be expected to regulate itself. One example of this is with regards to building codes, which if absent in purely competition regulated market system, might result in several horrific injuries or deaths to be required before companies would begin improving structural integrity, as consumers may at first not be concerned or aware of safety issues to begin putting pressure on companies to provide them, and companies would be motivated not to provide proper safety features due to how it would cut into their profits.

The concept of "market type" is different from the concept of "market structure." Nevertheless, it is worth noting here that there are a variety of types of markets.

The different market structures produce cost curves based on the type of structure present. The different curves are developed based on the cost of production, especially the graph contains marginal cost, average total cost, average variable cost, average fixed cost, and marginal revenue, which is sometimes equal to the demand, average revenue, and price in a price-taking firm.

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