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)
“Mothers seem to be in subtle competition with teachers. There is always an underlying fear that teachers will do a better job than they have done with their child.... But mostly mothers feel that their areas of competence are very much similar to those of the teacher. In fact they feel they know their child better than anyone else and that the teacher doesn’t possess any special field of authority or expertise.”
—Sara Lawrence Lightfoot (20th century)