market structure  The organization of a market, based mainly on the degree of competition. There are four basic market structures.

perfect competition  A market structure in which many producers supply an identical product. This is the most efficient structure, with prices set by supply and demand.

monopoly  A market structure in which a single producer supplies a unique product that has no close substitutes. In an unregulated monopoly, the producer sets prices.

oligopoly  A market structure in which a few firms dominate the market and produce similar or identical goods. This structure is more competitive than a monopoly.

monopolistic competition  A market structure in which many producers supply similar but varied products. This structure is the closest to perfect competition.

Market failure  A situation in which the market fails to allocate resources efficiently.

externality  A cost or benefit that arises from production or consumption of a good or service that falls on someone other than the producer or consumer.

public goods  Goods and services that are used collectively and that no one can be excluded from using. Public goods are not provided by markets. Examples include national defense and clean air.