On the basis of competition, market can be classified into two main types :

1. Perfect competition 

2. Imperfect competition : 

It is further classified into. 

(A) Monopoly 

(B) Oligopoly 

(C) Monopolistic Competition

According to Mrs. Joan Robinson, “Perfect competition prevails when the demand for the output of each producer is perfectly elastic. ” Hence, it is a market where there are large number of buyers and sellers engaged in buying and selling a homogeneous product at a single price in the market. 

Imperfect competition:

(A) Monopoly: According to E. H. Chamberlin, “A monopoly refers to a single firm which has control over the supply of a product which has no close substitutes.” Hence, he can charge different prices from different buyers on the basis of demand.

(B) Oligopoly : An oligopoly is a market situation in which there are few sellers and a large number of buyers. Sellers may sell similar or different products which are close substitutes of each other.

(C) Monopolistic Competition : According to E. H. Chamberlin, “Monopolistic competition refers to competition among a large number of sellers producing close but not perfect substitutes.” Hence, this is a market which has features of both monopoly and perfect competition. E.g. for soaps, washing powders, etc.