In economics, a state of affairs in which the necessary conditions for perfect competition are not met. In such a situation, a major component of demand is the influence of advertising and product branding. In the real world, competition is generally imperfect, perhaps because competition is limited by the operation of restrictive practices and/or because price competition is limited.
Imperfect competition
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In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. It is a market structure that does not meet the conditions of perfect competition. [1]
Forms of imperfect competition include:
- Monopoly, in which there is only one seller of a good.
- Oligopoly, in which there is a small number of sellers.
- Monopolistic competition, in which there are many sellers producing highly differentiated goods.
- Monopsony, in which there is only one buyer of a good.
- Oligopsony, in which there is a small number of buyers.
There may also be imperfect competition in markets due to buyers or sellers lacking information about prices and the goods being traded.
There may also be imperfect competition due to a time lag in a market. An example is the “jobless recovery”. There are many growth opportunities available after a recession, but it takes time for employers to react, leading to high unemployment. High unemployment decreases wages, which makes hiring more attractive, but it takes time for new jobs to be created.
References
- ^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 153. ISBN 0-13-063085-3. http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.
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Mentioned in
- Joan Violet Robinson (English economist)
- Léon Walras (French economist)
- monopoly (in business)
- structuralism
- competition (in economics)
- Marginal revenue productivity theory of wages
- Edward Chamberlin
- Donald Dewey
- Cournot conjecture
- Oligopsony
