Categories: Investing Essentials

Imperfect Competition

Imperfect competition refers to a market scenario where there are multiple sellers selling non-identical or dissimilar goods. This is opposite to a perfect competition scenario. Here the sellers enjoy the benefit of levying extraordinary prices to enjoy higher profits. This further attracts more sellers to enter the market and loss-making businesses have to see an exit. In such a market scenario, sellers do not need to seek approval from authorities to set their prices and adhere to the requirements of a perfectly competitive market.

Types of imperfect competition

Given below are a few types of imperfect competition market structures.

Monopolistic market – A market with a single seller
Oligopolistic market – A market with a small group of sellers who are capable of influencing prices and production
Duopolistic market – A market with only two sellers thereby having absolute control over prices and production
Oligopsony – A market with a very limited set of buyers
Monopsony – A market with only one buyer.

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