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:
“There was an artist in the city of Kouroo who was disposed to strive after perfection. One day it came into his mind to make a staff. Having considered that in an imperfect work time is an ingredient, but into a perfect work time does not enter, he said to himself, It shall be perfect in all respects, though I should do nothing else in my life.”
—Henry David Thoreau (1817–1862)
“The praise of ancient authors proceeds not from the reverence of the dead, but from the competition and mutual envy of the living.”
—Thomas Hobbes (1588–1679)