The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Market Structure

  • John Sutton
Reference work entry


The term ‘market structure’ relates to the number and size distribution of firms in a market. Markets dominated by a few large firms are said to be ‘concentrated’. This article offers a brief review of the modern literature that sets out to explain differences in concentration levels across different industries.


Advertising Barriers to entry Endogenous sunk costs First mover advantages Herfindahl index Integer effects k-firm concentration ratio Learning Market structure Mergers Minimum efficient scale Monopolistic competition Monopoly Multi-stage games Network effects Oligopoly Perfect competition Rate of return Research and development Scale economies 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Bain, J. 1956. Barriers to new competition. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  2. Dasgupta, P., and J.E. Stiglitz. 1980. Industrial structure and the nature of innovative activity. Economic Journal 90: 266–293.CrossRefGoogle Scholar
  3. Demsetz, H. 1973. Industry structure, market rivalry, and public policy. Journal of Law and Economics 20: 113–124.Google Scholar
  4. Katz, M.L., and C. Shapiro. 1985. Network externalities, competition and compatibility. American Economic Review 75: 424–440.Google Scholar
  5. Schmalensee, R. 1989. Inter-industry studies of structure and performance. In Handbook of industrial organization, ed. R. Schmalensee and R. Willig, vol. 2. Amsterdam: North-Holland.Google Scholar
  6. Shaked, A., and J. Sutton. 1986. Product differentiation and market structure. Journal of Industrial Economics 36: 131–146.CrossRefGoogle Scholar
  7. Sutton, J. 1991. Sunk costs and market structure. Cambridge, MA: MIT Press.Google Scholar
  8. Sutton, J. 1998. Technology and market structure. Cambridge, MA: MIT Press.Google Scholar
  9. Sutton, J. 2007. Market structure: Theory and evidence. In Handbook of industrial organization, ed. M. Armstrong and R. Porter, vol. 3. Amsterdam: North-Holland.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • John Sutton
    • 1
  1. 1.