Economics - Imperfect Competition | 11th Economics : Chapter 5 : Market Structure and Pricing
Chapter: 11th Economics : Chapter 5 : Market Structure and Pricing
Imperfect Competition
Imperfect
Competition
The
concept of imperfect competition was propounded in 1933 in England by Joan
Robinson and in America by E.H. Chamberlin.
It is an
important market category where the individual firms exercise their control
over the price.
Definition: Imperfect competition is a competitive
market situation where there are many sellers,
but they are selling heterogeneous (dissimilar) goods as opposed to the perfect
competitive market scenario. As the name suggests, competitive markets are
imperfect in nature.
Description: Imperfect competition is the real
world competition. Today some of the industries
and sellers follow it to earn surplus profits. In this market scenario, the
seller enjoys the luxury of influencing the price in order to earn more
profits.
If a
seller is selling a non-identical good in the market, then he can raise the
prices and earn profits. High profits attract other sellers to enter the market
and sellers, who are incurring losses, can very easily exit the market.
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