What do economists mean by the term "imperfectly competitive markets"?
How do market prices differ between perfectly and imperfectly competitive markets?
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Perfectly and Imperfectly competitive markets
The situation of imperfectly competitive markets was developed by Mrs. Robinson. According to this concept, there is imperfect knowledge of the market situations regarding the prices and commodities among the buyers and the sellers. Producers adopt the policy of product differentiation. Firms have free entry and exit. They may join the industry, whenever they want can also leave the industry at their disposal. Imperfect competition markets have got the following important features: (Mathur, 2003)
1. Large number of firms: There are large numbers of firms in the industry, so the individual firm is incompetent to affect the price of the industry. Even firm has its own price and output policy and does not bother much for the reactions of rival firms.
2. Product differentiation: Individual firm adopt the policy of product differentiation. These products are not perfect substitutes but may be close substitutes. The products may differ regarding the quality, size, color, packaging, contents; guarantee period, service after sales, credit terms and location of stores, etc. For example, we find toothpaste of different brand such as, Colgate, Pepsodent, and Close up, etc. All of them are the close substitutes. Product differentiation is classified as ;
 Differentiation of the quality of the product
 Differentiation of the sales technique.
Free entry and exit: Firms are free to join and leave the industry at their own will. A new firm may enter the product and produce close substitutes, without affecting the market significantly.
Classification of the imperfect competition market:
1. Monopolistic competition
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