In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary...

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In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary...

In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. What is the difference between perfect and imperfect competition?

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Answer 1

Answer #1

The differences between perfect and imperfect competition as follows

1) in a perfect competition the product sold is homogeneous while in an imperfect competition the product sold might be heterogeneous as well which is differentiated product or it can be the same product.

2) in perfect competition the market forces decide the price and the firms are the price takers while in imperfect competition there is a chance that the firm can set the market price where there can be price makers as well

3) market power can exist in in perfect competition while in perfect competition there is no existence of market power.

4) there can be barriers to entry in imperfect competition while in a perfect competition there are no barriers to entry

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Answer 2

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In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary...

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