What is imperfect competition

With the flood of the market with a large number of products, negative and even sometimes illegal methods come into play to gain consumer loyalty. Such activities are considered imperfect competition.

The concept of imperfect competition

Imperfect is called competition, in the conditions of which individual manufacturers have the ability to control prices of manufactured products. The emergence of imperfect markets is associated with the restriction of perfect competition and a distortion of the mechanism of market self-regulation.

Several prerequisites for imperfect competition are known, among which one can single out a significant share of sales in the market of various manufacturers, product heterogeneity, obstacles to entry into the industry, non-economic methods for competitors to interact with each other, information imperfection, and manufacturers' ability to control prices own products, the presence of a monopoly (one producer) or monopsony (one buyer); the influence of the state on the functioning of the market.

Each of the factors individually or collectively can violate market self-regulation. Individual enterprises acquiring market power may influence existing prices and offers. Unlike the perfect competition market, where output does not affect the level of market prices, the imperfect competition market is directly involved in this phenomenon, and the behavior of one company becomes significant within one or several industries.