Imperfect Competition

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DEFINITION of 'Imperfect Competition'

A type of market that does not operate under the rigid rules of perfect competition. Perfect competition implies an industry or market in which no one supplier can influence prices, barriers to entry and exit are small, all suppliers offer the same goods, there are a large number of suppliers and buyers, and information on pricing and process is readily available. Forms of imperfect competition include monopoly, oligopoly, monopolistic competition, monopsony and oligopsony.


BREAKING DOWN 'Imperfect Competition'

Perfect competition is often viewed as a theoretical model, because every industry or market operates in some form of imperfect competition. For example, some industries rely on heavy initial capital investment, such as industrial manufacturers and telecom providers. This makes the prospect of having many competitors practically impossible. In the real world, markets are evaluated by their relative closeness to perfect competition, and efforts are made to approach it.

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RELATED FAQS
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    The global airline sector is expected to benefit from robust growth as airlines continue to attract more passengers. Demand ... Read Full Answer >>
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    The airline industry is a significant driver of economic growth. Smaller airlines are merging and forming companies better ... Read Full Answer >>
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    No economist believes perfect competition is representative of the real world. Very few believe perfect competition is ever ... Read Full Answer >>
  4. What is the difference between perfect and imperfect competition?

    Perfect competition is a microeconomics concept that describes a market structure controlled entirely by market forces. In ... Read Full Answer >>
  5. What's the difference between monopoly and monopsony?

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