Can You Explain Imperfect Competition In Any Market?

2 Answers

Tariq Habib Profile
Tariq Habib answered
One serious deviation from an efficient market comes from imperfect competition and monopoly elements. Whereas under perfect competition no firm or consumer can affect prices, imperfect competition occurs when a buyer or seller can affect a goods price. For example, if the telephone company or a labour union is large enough to influence the price of phone service or labour, respectively, some degree of imperfect competition has set in. When imperfect competition arises, society may move inside its production possibility curve. This would occur, for example, if a single seller raised the price of a good sky-high to earn extra profits. The output of that good would be reduced below the most efficient level, and the efficiency of the economy would thereby suffer. In such a situation, the invisible-hand property of markets may be violated.
Imperfect competition leads to prices that rise above cost and to consumer purchases that are reduced below efficient levels. The pattern of too high price and too low output is the hallmark of the inefficiencies associated with imperfect competition.
In reality, almost all industries possess some measure of imperfect competition. Airlines, for example, may have no competition on some of their routes but face several rivals on others.
Muhammad Abdullah786 Profile
It means a situation in which the aggressive conditions in the market to fill necessary circumstances for perfect competition are not satisfied. Monopoly, oligopoly are its forms. May be it is the imperfect situation in the market due to the lack of information about the prices of goods, which are being traded by buyer and seller.

Unemployment creates a decrease in the wages. New employee takes time, because there are many growth opportunities after a recession, so in this way there is imperfect competition found in the market.
In imperfect market there is no blockade for come in or to move away. Any one can enter and exist easily. The range of buyers and sellers are huge. It was also due to monopolistic competition in the market. It is a competition in which different firms producing the same products in the same market. The demand was not so elastic for there products. So in this way there is situation of imperfect competition in the market.
The equilibrium in the market can be adopting polices for entry of the firms. By reducing unemployment in the country.

Answer Question

Anonymous