Market. Market is that whole area where buyers arid sellers come in close contact. Basis of classification of market. Market can be divided in following parts :
- Perfect competitive
- Monopoly
- Monopolistic competition.
Following are the basis of this distribution :
1. Number of buyers and sellers in Market. If number of purchasers and sellers is very high in the market then it is market of perfect competition or monopolistic competition. But in monopolistic competition number of sellers remains less than perfect competition. If there is only sellers of commodity in market and number of buyers is high then it will monopolistic market. If there are little (some) sellers of commodity then it will oligopolistic market.
2. Nature of Commodity. If commodity selling in market is same or homogeneous then it will be position of perfect competitive market, and product differentiation in its opposition is considered the base of monopolistic competition.
3. Degree of Price control. If a firm has full control on the price of selling commodity in market then it will be monopolistic. If control is partial then it will be monopolistic competition and its control is zero then it will be perfect competition.
4. Knowledge of the Market. If sellers and purchasers have full knowledge of situation of market then it will be perfect competition. In its opposite imperfect knowledge is speciality of monopoly and monopolistic competition.
5. Mobility of Factors. Production factors have full mobility in situation of perfect competition. But mobility of factors is general in other forms of market.
