Imperfect Competition

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Definition: Imperfect Competition

Imperfect competition is a kind of market where there are many sellers but they are selling dissimilar goods such that the rules & conditions of perfect competition doesn’t apply.

In this market the firms can have some control over the price of their offerings. It is possible for firm to exercise their marketing power & can play on the price without their demand being affected.

There are four types of Imperfect markets:

• Monopoly- This is a market situation where there is only one seller & has full control over the market. The consumers don’t have any other option but to adjust to the policies being adopted by the firm.

• Oligopoly- This is a market situation in which there are few sellers of a product & consumer don’t have too much of options. There is potential collusion happening between the firms. Each firm is large enough to influence the market prices.

• Monopolistic competition- Monopolistic competition refers to the market in which there are many sellers selling highly differentiated products.

• Monopsony- This a type of market in which only one buyer is present but there are many sellers.



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