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Mastering Industry Analysis through Market Structures

Industry analysis is a cornerstone of solid equity research — but surface-level understanding isn’t enough. To dig deeper and build sharper insights, you need to look at the market structure of the industry you're studying.

Every industry broadly falls into one of four categories:
Perfect Competition, Monopolistic Competition, Oligopoly, or Monopoly.

Understanding where your industry fits among these helps you unlock key insights. For instance, if an industry has many buyers but only a handful of sellers — like telecom — it’s likely an oligopoly. From here, you can start asking sharper questions:

Are entry barriers truly high, or is there a disruptor lurking?

Is there price interdependence? Could a price war erupt, or are players likely to form a cartel?

By identifying the market structure, you can connect broader economic theories with real-world dynamics, helping you craft a more holistic investment thesis.

So next time you're analyzing an industry, don’t stop at just identifying players and opportunities. Go a level deeper — explore the structure, challenge assumptions, and build your analysis around the forces that shape market behavior. That’s where real insight lies.