Market Share: Definition, Formula & Example
Market share refers to the percentage of a market a business owns, usually determined by its total revenue as a percentage of the overall market.
A market structure defines the economic environment by which a business finds itself in. How much competition is there? What price pressures are there? Where is the competition pricing and pitching its products at? All such questions help us to define market structures including oligopoly, monopoly, and perfect competition.
Market share refers to the percentage of a market a business owns, usually determined by its total revenue as a percentage of the overall market.
A monopsony is where there is a sole buyer of a product, but many sellers.
Perfect Competition is a type of market structure. In short, perfect competition is a market structure whereby there are many firms that sell a similar product.
A market that has Monopolistic structure can be seen as a mixture between a monopoly and perfect competition. Whilst monopoly and perfect competition are at completely different ends of the spectrum; monopolistic competition is somewhere in between.
When looking at the causes of monopoly, it is important to first define what it is.
A natural monopoly occurs when there are high fixed costs meaning that it is unprofitable for more than one to be present in the market.
Oligopoly is derived from the Latin ‘olígoi’ – meaning “few”, and ‘pōléō’ – meaning “to sell”. So loosely translated, it means ‘few sellers’. This is a key characteristic of oligopolistic markets as it is defined by a few firms dominating the market.