In a market there needs to be at least one buyer and one seller. Depending on the number of buyers and sellers the market competition is defined.
Types of Market:
1. Perfect Competition-
Many buyers and many sellers, none is able to control the price. With so many players present in the market it is impossible to increase margins as both buyers and sellers have infinite alternatives. A perfect competition has very less barriers to entry. Eg: Commodities market.
Several large sellers present in the market that have some control of the prices. Oligopolist doesn’t have the same power as monopolist but can partner with other players to control the prices. Eg:- Airlines
There is a single seller present in the market with a considerable control over the prices and supply of the products. The overall revenue will depend upon the customer’s willingness to pay the price. As the firm captures most of the market it gets economies of scale and can deliver value to the customers at lower cost. In a monopoly the barriers to entry are very high as the first player will have higher economies of scale so the new entrant will never be able to compete at the same level. Eg: Google
There is a single buyer with a considerable control over the demand and the prices of the products. When a single buyer is present he has higher bargaining power can decide upon the wage rates and reduce the social welfare. Eg:- Government, Amazon, Walmart
5. Monopolistic Market
In a monopolistic market there is imperfect competition and many producers produce the products which are not perfect substitutes and can be differentiated from one another. The prices of the products are decided based on the competition.