We have already given classification of markets. The following criteria for the classification of markets have been suggested:

(I) Substitutability of Products This criterion refers to the’ existence and ‘closeness
of substitutes i.e. the extent and form of competition among the firms in the industry. This criterion may be measured by the conventional price cross-elasticity
(ep) for the products of any two finns

This formula measures the degree to which the sales of the firm are affected by the price charged by the lirm in the industry. If the elasticity is high. the products of the tWI) firms will be close substitutes. In the case of perfect substitutes (!-e. homogeneous products). the price cross-esasticity between every pair of ucers approaches infinity. 011 the other hand. if products are differentiated. but can be substituted another. the price cross-elasticity will be finite uivc, If products are not substitutes. their price will tend tu zero