In modern conditions, almost every real market will to one degree or another be considered monopolized, that is, a market with imperfect competition. Imperfect competition is a market in which one or another condition of pure competition is not fulfilled.
The vast majority of products in most modern markets are offered by a limited number of companies that, due to their dominant position, are able to influence the conditions for the sale of goods and, above all, the price level.
In total, economists distinguish four market structures: pure competition, monopolistic competition, as well as monopoly and oligopoly. The last three species are imperfect competition.
The need to study imperfect competition is explained by the fact that a significant amount of economic activity is carried out in the conditions of monopolies. This problem is especially relevant for the Russian economy.
Imperfect competition in the work of economists
A large number of works by various economists are devoted to the analysis of competition. Adam Smith, for example, proposed the concept of “free competition,” which became the prototype of perfect competition. In Smith's work, imperfect competition emerged as monopolies.
Joan Robinson returns to statistical analysis of imperfect and perfect competition. In her works, she substantiates the relationship between monopoly price, price elasticity of demand and marginal cost.
However, at present, many problems remain unexplored, including imperfect competition in the context of globalization.
Imperfect Competition: Essence and Content
Competition is an integral part of a market economy. Thanks to the market, coordination of consumer and producer plans is ensured, more efficient use of resources, redistribution of income in accordance with performance results.
But this is possible only when manufacturers of goods compete, compete with each other.
All forms and types of competition are reduced to two main ones: perfect and imperfect. Perfect competition is a market model that meets a number of conditions:
· A large number of buyers and sellers.
· Absolute market transparency.
· The inability of certain market entities to influence the behavior of others.
· Uniformity of goods sold.
· Mobility of all factors of production.
· Lack of subjective control by individual producers over prices.
The modern market is a market with imperfect competition. Competition becomes such when at least one sign of perfect competition is violated.
The degree of monopolism or imperfection of competition can be different.
The first step is monopolistic competition, in which many companies operate on the market, but each of them has some piece of monopoly power, due to differentiation of product quality. An example can be imperfect competition in the labor market, when each candidate has his own skills, features that distinguish him from all others.
The next step is oligopoly, when several large firms prevail on the market. In this case, the action of one firm will lead to retaliatory actions of all other firms.
The highest stage of competition imperfection is pure monopoly. In this situation, only one company operates in the industry. For example, the only airport, the only railway in the city.
Thus, we can conclude that imperfect competition is a form of existence of almost all real markets.