Imperfect or Monopolistic Competition

–Many buyers and sellers
– Products differentiated
– Relatively free entry and exit
– Each firm may have a tiny ‘monopoly’ because of the differentiation in their product
– Firm has some control over price
– Examples: Restaurants, professions-- solicitors etc., building firms-- plasterers, plumbers etc.

Oligopoly-- Competition amongst the few
– Industry dominated by small number of large firms
– Many firms may make up the industry
– High barriers to entry
– Products could be highly differentiated-- branding or homogenous
– Non-price competition
– Price stability within the market-- kinked demand curve?
– Potential for collusion?
– Abnormal profits
– High degree of interdependence between firms

Examples of Oligopolistic Structures:
– Supermarkets
–Banking Industry
–Chemicals
– Oil
–Medicinal drugs
– Broadcasting