Imperfect competition is a market structure where there are many small firms, each producing a slightly differentiated product. The key characteristics of imperfect competition are:
There are many firms in the market
Each firm has a small market share
Each firm produces a slightly differentiated product
There are no barriers to entry or exit
Firms in an imperfectly competitive market are price takers – they cannot influence the market price of their product. The market price is set by the interaction of demand and supply in the market as a whole.
Imperfect competition is in contrast to perfect competition, which is a market structure with a large number of small firms, each producing a homogeneous product. In perfect competition, firms are price takers and there are no barriers to entry or exit. What are the different types of competition? There are many types of competition, but they can broadly be divided into two main categories:
1. Perfect competition
Perfect competition is a theoretical market structure in which a large number of small firms compete against each other to sell a homogeneous product. There are no barriers to entry or exit, and all firms have perfect knowledge of the market.
2. Imperfect competition
Imperfect competition is a market structure in which there are a small number of firms, each of which has some degree of market power. There are barriers to entry and exit, and firms have imperfect knowledge of the market.
What is an example of oligopoly?
Oligopoly is a market structure in which there are only a few firms producing a product. This is in contrast to a monopoly, in which there is only one firm producing a product, or to a competitive market, in which there are many firms producing a product.
What is the another name of imperfect competition?
The other name for imperfect competition is monopoly. A monopoly is a market structure in which there is only one firm that produces a product or service. This firm has complete control over the price of the product or service, and there are no close substitutes for the product or service.
What is perfect and imperfect competition?
In perfect competition, there are many small firms in the market, and each firm has a very small market share. The products offered by the firms are identical, and there is perfect information in the market, so that consumers know exactly what each firm is offering. There are no barriers to entry or exit, and firms can freely enter or leave the market.
In imperfect competition, there are either fewer firms in the market or the firms have a larger market share. The products offered by the firms may be similar but not identical, and there is imperfect information in the market, so that consumers may not know exactly what each firm is offering. There may be barriers to entry or exit, so that firms may not be able to freely enter or leave the market. Is oligopoly imperfect competition? Yes, oligopoly is a form of imperfect competition. In an oligopoly, there are a small number of firms that control a large percentage of the market. This gives them the ability to influence prices and limit competition.