Economy

Imperfect competition

The study of the different market structures is of great importance when we talk about microeconomics. The way in which the market behaves, depending on the number of buyers or sellers, its dimensions, the existence of entry and exit barriers, etc. are all factors that will determine how to achieve a balance. One of these forms is imperfect competition, which is a situation that occurs in the competitive market in which a large number of sellers are observed, but sell heterogeneous products as opposed to the perfect competitive market scenario. As its name indicates, competitive markets are imperfect in nature and are capable of significantly affecting the products or services prices they distribute in the market. Whenever the principles of perfect competition are surpassed, then there will be imperfect competition. Since all real markets exist outside the plane of the perfect competition model, each can be classified as imperfect.

What is imperfect competition?

Imperfect competition in the market occurs when one or more companies manage to influence in some way the price of a product because they offer products or limit their supply, making that the fewer companies there are, the greater the ability to influence the price of the article will be.

Characteristics of imperfect competition

In imperfect competition market, there are different characteristics that differentiate it from other types of market, among them we have:

Types of market with imperfect competition

There are three types of imperfect competition in the market:

Advantages

Some of the main advantages of imperfect competition are:

Disadvantages

Among the disadvantages of imperfect competition the following can be mentioned:

Examples of imperfect competition

Here is a list of companies that operate under the premise of imperfect competition. As explained above, many of the types of markets that make up imperfect competition are monopolies and oligopolies.

Written by Gabriela Briceño V.
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