Markets have an equilibrium structure determined primarily …
Markets have an equilibrium structure determined primarily by two factors:
1) How differentiated the goods are within the market being analyzed
2) How diversified the production structure must be to service all differentiations of goods in that market
Replies
When the market has minimal differentiation of goods, there will be a minimal number of firms providing those goods.
When the market has massive differentiation of goods, but a single production structure can service all differentiations more or less equally, there will be a minimal number of firms providing those goods.
When the market has massive differentiation of goods, and specialized production structures are required to produce the goods in that market, then there will be at least as many firms as there are specialized production structures to service that market.
This is one of the most important lessons you can learn in economics if you are in business, whether as an entrepreneur or otherwise.
Do not ignore it, and do not underestimate its value.