Bcom 1st Year Meaning of Imperfect Competition
Incomplete competition means
In the real world there is neither absolute competition nor absolute monopoly, but both have conditions, which Mrs. Joan Robinson has called incomplete monopoly. Incomplete eligibility is present when there is an imperfection in the signs of perfect competition; And the number of buyers and sellers in the market is not high or differentiation etc. In Nikki language we can say that imperfect competition is one in which the demand for the goods of an individual firm is not perfectly elastic.
Definitions of incomplete competition
(1) According to Prof. Learner, “imperfect competition occurs when a seller encounters a falling demand line for his goods.”
(2) According to Stonier and The Hague, “although the basic feature of imperfect competition is that the average forward lines fall downward to their full length, they may fall downward at different rates.”
(3) According to Fairchild, “if the market is not properly organized, if there is a difficulty in the mutual contact between the buyer and the seller and is not able to find the prices of the goods and the prices given by other persons, then such situation What we call imperfect competition. “
Major reasons for incomplete competition
(Causes of Imperfect Competition)
In practical life imperfect competition is found because for various reasons the conditions necessary for full competition are not fulfilled in practice; like
1. Lack of buyers and sellers (producers) in large numbers (Buyers and Sellers not in good number) – In practical life, often many sellers and buyers of many products are not found, consequently buyers and sellers (mainly sellers) Succeed in influencing prices.
2. Product Differentiation – In practice, the goods produced by different producers are often not found to have perfect symmetry, so that the goods do not replace each other completely. Object discrimination can be both real or imaginary. In fact, object discrimination is the root and root cause of imperfect competition.
3. Imperfect Knowledge of Market to Buyers and Sellers – Neither buyer nor seller in real life. They are completely familiar with each other and neither do they have complete knowledge of the market, so they
But at what price do they buy the vikas. It is not known what item is in the market and at what place, which hinders the prevalence of one price in the entire market.
4. Inertia of Buyers – This tendency of buyers to buy goods from a nearby place due to their laziness etc. often hinders the circulation of price.
5. Due to lack of means of transport and communication or high transportation cost of transport and communication and high cost of transportation, most of the buyers are not able to buy cheap market goods due to lack of efficient, cheap and accessible transportation means.
Apart from the above reasons, sometimes incomplete markets are also created due to some other reasons such as the abundance and effectiveness of the advertisements, often the buyers are not able to act with discretion or because of the trademarks, the sellers are able to charge a higher price. .
Distinction of imperfect competition
(Kinds of Imperfect Competition)
1. Duopoly – Duopoly means that position of the market. In which there are only two producers of the commodity, both sell the same item, the goods of the two producers are often identical, both are independent in their production work and both the goods compete with each other.
2. Oligopoly – oligopoly means – some seller. If the total supply of an item is done by some firms or individuals, it is called a condition of oligopoly. In this situation, the number of sellers is less, so they are aware of the supply of the item and its price. The reason for this is that the business policy of one vendor also has an impact on other vendors.
3. Monopolistic Competition – Monopolistic competition is a mixture of both monopoly and competition.
Price Determination Under Imperfect Competition Like imperfect competition, pricing in imperfect competition is also done by the powers of demand and supply. Bcom 1st Year Meaning of Imperfect Competition
Under incomplete competition there are more number of firms and each firm produces different, but close substitutes. This is the reason that the demand for the goods produced by every firm is very elastic. In this case, the Average Revenue Curve-AR or demand-curve is inclined from left to right downward. The demand for settlement of each producing unit (firm) is influenced by the interests, nature and preferences of consumers and the prices of other substitute goods. Thus the elasticity of demand of each firm varies, due to which their demand curves also vary. Also, it means that if one firm changes the price of its goods, then it has no significant effect on the price policy of other firms .
In each case, each firm has an average cost curve. This curve is U shaped. The entry or exit of some firms under imperfect competition (monopolistic competition) has no significant effect on its size.