Objectives and Market Structure

This module provides a basic introduction to the objectives of firms and the different market structures they operate in. While profit maximization is the primary objective for most firms, there are other objectives such as survival, growth, and market share. These objectives influence a firm’s behavior in the market. Markets can be categorized into perfect competition, monopolistic competition, oligopoly, and monopoly based on factors like the number of firms, product differentiation, barriers to entry and exit, and price-setting power. Perfect competition is a theoretical concept with a large number of small firms producing identical products. Monopolistic competition involves a large number of small firms with slightly differentiated products. Oligopoly consists of a small number of large firms with high product differentiation and high barriers to entry and exit. Monopoly is a market with only one firm.