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Market forms

Market forms Definition

In economics, the main criteria by which one can distinguish between different market forms are: the number and size of producers and consumers on the market, the type of goods and services being traded, and the degree to which information can flow freely. The major market forms are:

  • Perfect competition, in which the market consists of a very large amount of firms producing product in the same domain.
  • Monopolistic competition, where there are a large amount of somewhat independent firms
  • Oligopoly, in which a market is dominated by a small number of sellers
  • Monopoly, where there is only one provider of a product or service
  • Natural monopoly, a monopoly in which economies of scale cause efficiency to increase continuously with the size of the firm
  • Monopsony, when there is only one buyer in a market

These somewhat abstract concerns tend to determine some but not all details of a specific concrete market system where buyers and sellers actually meet and commit to trade.

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