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  • Market refers to a structure in which buyers and sellers of the commodity interact with each other for making transactions. It is not essential that the buyer and seller assemble at one place for making transaction.
  • The important thing is that they should be in contact with each other through any means of communication.
  • In other words market is an entire area where buyer and sellers of a commodity are in close contact to affect purchase and sale of a commodity.


  • Market Structure is also known as the number of firms producing identical products. Firms sell goods and services under different market conditions which economists call Market Structures.
  • A Market Structure describes the key traits of a market, including the number of firms, the similarity of the products they sell, and the ease of entry into and exit from the market.
  • An examination of the business sector of our economy reveals firms’ operating in different Market Structures.
  • It is best defined as the organizational and other characteristics of a market. These characteristics affect the nature of competition and pricing.

Market structure refers to number of firms operating in the industry, nature of competition between them and nature of the product.

These factors determine market structure.

  1. Number of buyers and sellers:- Its significance lies in the fact that the action of buyer and seller influences the price of the commodity in the market. And the degree of influence on price depends upon share of buyer’s demand in total market demand or share of seller’s supply in total market supply.
  2. Nature of commodity:- If commodity is homogeneous and standardized, it will fetch same price whereas if product is differentiated, different sellers of the same commodity may charge different prices.
  3. Entry and Exit of firms:- New firms shall be allowed to enter in a profit making industry whereas a loss incurring firm should have the right to leave the industry or to exit the sector.

Indian Economy

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