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In economics, imperfect competition refers to a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market. Imperfect competition causes market inefficiencies, resulting in market failure . [ 1 ]
An oligopsony is a form of imperfect competition. The terms monopoly (one seller), monopsony (one buyer), and bilateral monopoly have a similar relationship. Industry examples
This can lead to inefficiency due to imperfect competition, which can take many different forms, such as monopolies, [17] monopsonies, or monopolistic competition, if the agent does not implement perfect price discrimination. In small countries like New Zealand, electricity transmission is a natural monopoly.
The book discusses the views of Alfred Marshall and Arthur Cecil Pigou on competition and the theory of the firm. Marshall believed that competition was imprecise, with prices being influenced by the rise and fall of demand. He also used the analogy of trees in a forest to explain how firms grow and establish a monopoly.
Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other but selling products that are differentiated from one another (e.g., branding, quality) and hence not perfect substitutes. In monopolistic competition, a company takes the prices charged by its rivals as given and ignores ...
Imperfect competition is included in the JEL classification codes as JEL: D43, L13 Articles relating to imperfect competition , situations where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market , resulting in market failure .
As an imperfect competition model, Cournot duopoly (also known as Cournot competition), in which two firms with identical cost functions compete with homogenous products in a static context, is also known as Cournot competition. [1]
Economists who believe that perfect competition is a useful approximation to real markets classify markets as ranging from close-to-perfect to very imperfect. Examples of close-to-perfect markets typically include share and foreign exchange markets while the real estate market is typically an example of a very imperfect market.