Question

In economic theory, imperfect competition is the competitive situation in any market where the conditions necessary for perfect competition are not satisfied. It is a market structure that does not meet the conditions of perfect competition; compare and contrast imperfect competition and perfect competition.

Answer 1

In perfectly competitive market

1. All firms sell identical products
2. Firms cannot control prevailing prices
3. Market share per firm is small
4. Firms and consumers have perfect knowledge about industry  

In an Imperfect competition Market

1. Markets are characterized as oligopoly or monopsony or monopolistic competitive
2. HHI Index can be very high
3. Firms can form cartel
4. Small number of firms
5. Perfect knowledge does not exist.

Similarities include that both type of firms seek profit maximization and have similar cost and production functions.