Write any three characteristics of imperfect competition.
Answers
Answer: Under imperfect competition, there are large number of buyers and sellers. Each seller can follow its own price-output policy.
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Characteristics:
Large number of Sellers and Buyers: ...
Product Differentiation: ...
Selling Costs: ...
Free Entry and exit of Firms: ...
Price-makers: ...
Blend of Competition and Monopoly:
Explanation:
Answer:
What Is Imperfect Competition?
Imperfect competition exists whenever a market, hypothetical or real, violates the abstract tenets of neoclassical pure or perfect competition. The contemporary theory of imperfect versus perfect competition stems from the Cambridge tradition of post-classical economic though.
1. Oligopoly
What it is: Oligopoly describes a market in which there are a small number of sellers for a particular product.
For example, think of Amazon and eBay. These ecommerce giants offer a similar service—an online platform for people to buy and sell products. As these platforms have grown, they’ve both introduced concepts that have changed the nature of online shopping.
For example, Amazon invented the “Buy It Now” button, which eBay emulates. Both websites offer product and seller ratings in a 5-star system, making it easy for consumers to compare products on both platforms before making their choice.
2. Monopolistic Competition
What it is: A monopolistic market is one in which each seller provides a unique product, so no seller’s product can be a perfect substitute for another.
Many online stores that sell women’s clothing. Even though the base product is the same, each store offers different styles of shirts, different prices and different services. Another differentiator is branding and logos; a sport shirt from Nike might be identical to one from Puma if not for the different logos featured on them.
As another example, compare the clothing stores 6pm, Asos, and Lulus.
Each store targets a similar audience. Searching for the same type of clothing item on each store’s site, however, yields wildly different results. There’s also differentiation in each store’s coupons, price ranges, and clothing colors and styles.
3. Monopoly
What it is: A market in which there is one seller, but many different buyers.
For example, the vast majority of active blogs on the internet are powered by WordPress, which holds a monopoly on blog-based websites and is also growing as a host for CMS systems. Other blog platforms have existed, but no competitor to date has had the same lasting power. This infographic shows how WordPress is becoming not only a monopoly for blogging platforms, but for website CMS platforms as well. The company continues to attract new customers by offering its base product for free and only charging for hosting and support.
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Explanation: