In economic theory, imperfect competition is the competitive situation in any market where the sellers in the market sell different/dissimilar of goods, (haterogenous) that does not meet the conditions of perfect competition.
Forms of imperfect competition include:
- Monopoly, in which there is only one seller of a good.
- Oligopoly, in which there are few sellers of a good.
- 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 are few buyers of a good.
- Information asymmetry when one competitor has the advantage of more or better information.
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.
Famous quotes containing the words imperfect and/or competition:
“I do not wish to see John ever again,—I mean him who is dead,—but that other, whom only he would have wished to see, or to be, of whom he was the imperfect representative. For we are not what we are, nor do we treat or esteem each other for such, but for what we are capable of being.”
—Henry David Thoreau (1817–1862)
“Knowledge in the form of an informational commodity indispensable to productive power is already, and will continue to be, a major—perhaps the major—stake in the worldwide competition for power. It is conceivable that the nation-states will one day fight for control of information, just as they battled in the past for control over territory, and afterwards for control over access to and exploitation of raw materials and cheap labor.”
—Jean François Lyotard (b. 1924)