perfect competition describes markets such that no participants are large enough to hauct

8/3/2019 Perfect Competition Describes Markets Such That No Participants Are Large Enough to Hauct

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D.C.SCHOOL OF MANAGEMENT

AND

TECHNOLOGY

Project on Micro economics ASSINGMENT Various form ofSubmitted to- Mr. MohanKumar sir.


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Submitted by- Prabhakar MishraDCSMAT2011-13

Forms of marketExecutive summary-After seeing the various forms of market we can understand that

perfect, monopoly, monopolistic ,oligopoly etc are the form of market

prevails. but mainly we will found perfect and monopoly form of

market in the competative world.

Whereas imperfect competition a firm has some control over the pricea fact seen as a downward sloping demand curve for the firms output.

In addition to declining costs,other forces leading to imperfect

competition are the barriers to enter in the form of legal

restrictions,i.e.patents or government regulations.

These market are differentiated on the basis of their similar kind of

products available in the market, and various similar kind of the

product available in the market.

Monopolistic competition, also called competitive market, where there

are a large number of firms, each having a small proportion of the

market share and slightly differentiated products.

Oligopoly , in which a market is dominated by a small number of

firms that together control the majority of the market share.

Duopoly , a special case of an oligopoly with two firms.

Oligopsony , a market where many sellers can be present but meetonly a few buyers.

Monopoly, where there is only one provider of a product or service.
http://en.wikipedia.org/wiki/Monopolistic_competitionhttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Duopolyhttp://en.wikipedia.org/wiki/Oligopsonyhttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Monopolistic_competitionhttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Duopolyhttp://en.wikipedia.org/wiki/Oligopsonyhttp://en.wikipedia.org/wiki/Monopoly


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Natural monopoly, a monopoly in which economies of scale cause

efficiency to increase continuously with the size of the firm. A firm is

a natural monopoly if it is able to serve the entire market demand at a

lower cost than any combination of two or more smaller, more

specialized firms.

Monopsony, when there is only one buyer in a market.

Perfect competition is a theoretical market structure that features

unlimited contestability (or nobarriers to entry), an unlimited number

of producers and consumers, and a perfectly elastic demand curve.

Perfect competition

Perfect competition describes markets such that no participants are

large enough to have the market powerto set the price of a

homogeneous product. Because the conditions for perfect competition

are strict, there are few if any perfectly competitive markets. Still,

buyers and sellers in some auction-type markets, say forcommodities

or some financial assets, may approximate the concept. Perfect

competition serves as a benchmark against which to measure real-life

and imperfectly competitive markets.

Generally, a perfectly competitive market exists when everyparticipant is a "price taker", and no participant influences the price of

the product it buys or sells. Specific characteristics may include:

Infinite buyers and sellers Infinite consumers

with the willingness and ability to buy the product at a

certain price, and infinite producers with the willingness

and ability to supply the product at a certain price.

Zero entry and exit barriers It is relatively easy

for a business to enter or exit in a perfectly competitivemarket.

Perfect factor mobility - In the long run factors of

production are perfectly mobile allowing free long term

adjustments to changing market conditions.
http://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Economies_of_scalehttp://en.wikipedia.org/wiki/Monopsonyhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Barriers_to_entryhttp://en.wikipedia.org/wiki/Demand_curvehttp://en.wikipedia.org/wiki/Market_powerhttp://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Price_takerhttp://en.wikipedia.org/wiki/Factors_of_productionhttp://en.wikipedia.org/wiki/Factors_of_productionhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Economies_of_scalehttp://en.wikipedia.org/wiki/Monopsonyhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Barriers_to_entryhttp://en.wikipedia.org/wiki/Demand_curvehttp://en.wikipedia.org/wiki/Market_powerhttp://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/wiki/Commoditieshttp://en.wikipedia.org/wiki/Price_takerhttp://en.wikipedia.org/wiki/Factors_of_productionhttp://en.wikipedia.org/wiki/Factors_of_production


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Perfect information - Prices and quality of products

are assumed to be known to all consumers and producers.

Zero transaction costs - Buyers and sellers incur no

costs in making an exchange (perfect mobility).

Profit maximization - Firms aim to sell where

marginal costs meet marginal revenue, where they

generate the most profit.

Homogeneous products The characteristics of any

given market good or service do not vary across suppliers.

Non-increasing returns to scale - Non-increasing

returns to scale ensure that there are sufficient firms in the

industry.

In the short term, perfectly-competitive markets are notproductively

efficient as output will not occur where marginal cost is equal toaverage cost, but allocatively efficient, as output will always occur

where marginal cost is equal to marginal revenue, and therefore where

marginal cost equals average revenue. In the long term, such markets

are both allocatively and productively efficient.

Under perfect competition, any profit-maximizing producer faces a

market price equal to its marginal cost. This implies that a factor's

price equals the factor's marginal revenue product. This allows for

derivation of the supply curve on which the neoclassical approach is

based. (This is also the reason why "a monopoly does not have asupply curve.") The abandonment of price taking creates considerable

difficulties to the demonstration of existence of a general equilibrium

except under other, very specific conditions such as that of

monopolistic competition.

Results-
http://en.wikipedia.org/wiki/Returns_to_scalehttp://en.wikipedia.org/wiki/Productive_efficiencyhttp://en.wikipedia.org/wiki/Productive_efficiencyhttp://en.wikipedia.org/wiki/Marginal_costhttp://en.wikipedia.org/wiki/Average_costhttp://en.wikipedia.org/wiki/Allocative_efficiencyhttp://en.wikipedia.org/wiki/Marginal_revenuehttp://en.wikipedia.org/w/index.php?title=Average_revenue&action=edit&redlink=1http://en.wikipedia.org/wiki/Marginal_costhttp://en.wikipedia.org/wiki/Marginal_revenue_producthttp://en.wikipedia.org/wiki/Supply_curvehttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/General_equilibriumhttp://en.wikipedia.org/wiki/Monopolistic_competitionhttp://en.wikipedia.org/wiki/Returns_to_scalehttp://en.wikipedia.org/wiki/Productive_efficiencyhttp://en.wikipedia.org/wiki/Productive_efficiencyhttp://en.wikipedia.org/wiki/Marginal_costhttp://en.wikipedia.org/wiki/Average_costhttp://en.wikipedia.org/wiki/Allocative_efficiencyhttp://en.wikipedia.org/wiki/Marginal_revenuehttp://en.wikipedia.org/w/index.php?title=Average_revenue&action=edit&redlink=1http://en.wikipedia.org/wiki/Marginal_costhttp://en.wikipedia.org/wiki/Marginal_revenue_producthttp://en.wikipedia.org/wiki/Supply_curvehttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/General_equilibriumhttp://en.wikipedia.org/wiki/Monopolistic_competition


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In the short-run, it is possible for an individual firm to make an

economic profit. This situation is shown in this diagram, as the price or

average revenue, denoted by P, is above the average cost denoted by C

.

However, in the long period, economic profit cannot be sustained. The

arrival of new firms or expansion of existing firms (if returns to scale

are constant) in the market causes the (horizontal) demand curve of

each individual firm to shift downward, bringing down at the same

time the price, the average revenue and marginal revenue curve. The

final outcome is that, in the long run, the firm will make only normal

profit (zero economic profit). Its horizontal demand curve will touch

its average total cost curve at its lowest point.

Another very near example of perfect competition would be the fish

market and the vegetable or fruit vendors who sell at the same place.
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1. There are large number of buyers and sellers.

2. There are no entry or exit barriers.

3. There is perfect mobility of the factors, i.e. buyers can easily

switch from one seller to the other.

4. The products are homogenous.

.Equilibrium in Perfect Competition

Equilibrium in perfect competition is that point where market demands

will equal to market supply. Firm's price will be determined at this

point. In short run, equilibrium will be affected from demand. In long

run, both demand and supply of product will affect the equilibrium in

perfect competition. Firm will receive only normal profit in long run at

the equilibrium point.

Imperfect markets includes monopoly ,

monopolistic andOligopoly -Monopoly market-

A monopoly (from Greekmonos / (alone or single) + polein / (to sell)) exists when a specific person or enterprise is the only

supplier of a particular commodity. (This contrasts with a monopsony

which relates to a single entity's control of a market to purchase a good

or service, and with oligopoly which consists of a few entities

dominating an industry). Monopolies are thus characterized by a lack

of economic competition to produce the good orservice and a lack of

viable substitute goods. The verb "monopolize" refers to the process

by which a company gains much greater market share than what is

expected withperfect competition.

A monopoly is a market structure in which there is only one

producer/seller for a product. In other words, the single business is the

industry. Entry into such a market is restricted due to high costs or
http://en.wikipedia.org/wiki/Greek_languagehttp://en.wikipedia.org/wiki/Monopsonyhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Substitute_goodhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://www.investopedia.com/terms/m/monopoly.asphttp://en.wikipedia.org/wiki/Greek_languagehttp://en.wikipedia.org/wiki/Monopsonyhttp://en.wikipedia.org/wiki/Markethttp://en.wikipedia.org/wiki/Oligopolyhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Good_(economics)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Substitute_goodhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://www.investopedia.com/terms/m/monopoly.asp


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other impediments, which may be economic, social or political. For

instance, a government can create a monopoly over an industry that it

wants to control, such as electricity. Another reason for the barriers

against entry into a monopolistic industry is that oftentimes, one entity

has the exclusive rights to a natural resource. For example, in Saudi

Arabia the government has sole control over the oil industry. A

monopoly may also form when a company has a copyright or patent

that prevents others from entering the market. Pfizer, for instance, had

a patent on Viagra

A monopoly is be distinguished from monopsony, for which there is

only one buyer of a product or service ; a monopoly may also have

monopsony control of a sector of a market. Likewise, a monopoly

should be distinguished from a cartel (a form of oligopoly), for which

several providers act together to coordinate services, prices or sale ofgoods. Monopolies, monopsonies and oligopolies are all situations

such that one or a few of the entities have market powerand therefore

interact with their customers (monopoly), suppliers (monopsony) and

the other companies (oligopoly) in a game theoretic manner - meaning

that expectations about their behavior affects other players' choice of

strategy and vice versa. This is to be contrasted with the model of

perfect competition such that companies are "price takers" and do not

have market power.

Monopolies typically maximize their profit by producing fewer goodsand selling them at greater prices than would be the case for perfect

competition. (See also Bertrand, Cournot orStackelberg equilibria,

market power, market share, market concentration, Monopoly profit,

industrial economics). Sometimes governments decide legally that a

given company is a monopoly that doesn't serve the best interests of

the market and/or consumers. Governments may force such companies

to divide into smaller independent corporations as was the case of

United States v. AT&T, or alter its behavior as was the case ofUnited

States v. Microsoft, to protect consumers.
http://en.wikipedia.org/wiki/Cartelhttp://en.wikipedia.org/wiki/Market_powerhttp://en.wikipedia.org/wiki/Game_theoryhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Price_takershttp://en.wikipedia.org/wiki/Bertrand_competitionhttp://en.wikipedia.org/wiki/Cournot_competitionhttp://en.wikipedia.org/wiki/Stackelberg_competitionhttp://en.wikipedia.org/wiki/Market_sharehttp://en.wikipedia.org/wiki/Market_concentrationhttp://en.wikipedia.org/wiki/Monopoly_profithttp://en.wikipedia.org/wiki/Industrial_economicshttp://en.wikipedia.org/wiki/United_States_v._AT%26Thttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://en.wikipedia.org/wiki/Cartelhttp://en.wikipedia.org/wiki/Market_powerhttp://en.wikipedia.org/wiki/Game_theoryhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Price_takershttp://en.wikipedia.org/wiki/Bertrand_competitionhttp://en.wikipedia.org/wiki/Cournot_competitionhttp://en.wikipedia.org/wiki/Stackelberg_competitionhttp://en.wikipedia.org/wiki/Market_sharehttp://en.wikipedia.org/wiki/Market_concentrationhttp://en.wikipedia.org/wiki/Monopoly_profithttp://en.wikipedia.org/wiki/Industrial_economicshttp://en.wikipedia.org/wiki/United_States_v._AT%26Thttp://en.wikipedia.org/wiki/United_States_v._Microsofthttp://en.wikipedia.org/wiki/United_States_v._Microsoft


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Difference between perfect and monopoly form of market-


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Marginal revenue and price - In a perfectlycompetitive market price equals marginal revenue. In

a monopolistic market marginal revenue is less than price.

Product differentiation: There is zero productdifferentiation in a perfectly competitive market. Every

product is perfectly homogeneous and a perfect substitute

for any other. With a monopoly, there is great to absoluteproduct differentiation in the sense that there is not any

available substitute for a monopolized good. The

monopolist is the sole supplier of the good in question. A

customer either buys from the monopolizing entity on its

terms or does without.

Number of competitors: PC markets arepopulated by an infinite number of buyers and sellers.

Monopoly involves a single seller.

Barriers to Entry - Barriers to entry are factorsand circumstances that prevent entry into market by

would-be competitors and limit new companies from

operating and expanding within the market. PC markets


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have free entry and exit. There are not any barriers to

entry, exit or competition. Monopolies have relatively

great barriers to entry. The barriers must be strong enough

to prevent or discourage any potential competitor from

entering the market.

Elasticity of Demand; the price elasticity ofdemand is the percentage change of demand caused by a

one percent change of relative price. A successful

monopoly would have a relatively inelastic demand

curve. A low coefficient of elasticity is indicative of

effective barriers to entry. A PC company has a perfectly

elastic demand curve. The coefficient of elasticity for a

perfectly competitive demand curve is infinite.

Excess Profits- Excess or positive profits areprofit more than the normal expected return on

investment. A PC company can make excess profits in the

short term but excess profits attract competitors which

can enter the market freely and decrease prices,

eventually reducing excess profits to zero. A monopoly

can preserve excess profits because barriers to entry

prevent competitors from entering the market.

Profit Maximization - A PC companymaximizes profits by producing such that price equals

marginal costs. A monopoly maximizes profits by

producing where marginal revenue equals marginal costs.

The rules are not equivalent. The demand curve for a PC

company is perfectly elastic - flat. The demand curve is

identical to the average revenue curve and the price line.

Since the average revenue curve is constant the marginal

revenue curve is also constant and equals the demand

curve.

P-Max quantity, price and profit - If amonopolist obtains control of a formerly perfectly

competitive industry, the monopolist would increase


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prices, reduce production, and realize positive economic

profits.

Supply Curve -In a perfectly competitive marketthere is a well defined supply function with a one to one

relationship between price and quantity supplied. In a

monopolistic market no such supply relationship exists. A

monopolist cannot trace a short term supply curve

because for a given price there is not a unique quantity

supplied. As Pindyck and Rubenfeld note a change in

demand "can lead to changes in prices with no change in

output, changes in output with no change in price or

both." Monopolies produce where marginal revenue

equals marginal costs. For a specific demand curve the

supply "curve" would be the price/quantity combinationat the point where marginal revenue equals marginal cost.

If the demand curve shifted the marginal revenue curve

would shift as well and a new equilibrium and supply

"point" would be established. The locus of these points

would not be a supply curve in any conventional sense.

The most significant distinction between a PC company and a

monopoly is that the monopoly has a downward-sloping demand curve

rather than the "perceived" perfectly elastic curve of the PC Company.

Practically all the variations above mentioned relate to this fact. If

there is a downward-sloping demand curve then by necessity there is a

distinct marginal revenue curve. The implications of this fact are best

made manifest with a linear demand curve.

A pure monopoly has the same economic rationality of perfectly

competitive companies, i.e. to optimize a profit function given some

constraints. By the assumptions of increasing marginal costs,

exogenous inputs' prices, and control concentrated on a single agent or

entrepreneur, the optimal decision is to equate the marginal cost andmarginal revenue of production. Nonetheless, a pure monopoly can

-unlike a competitive company- alter the market price for its own

convenience: a decrease of production results in a greater price.
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Surpluses and dead weight loss created by monopoly price setting.

Monopolistic market-

Monopolistic competition is a form ofimperfect competition where

many competing producers sell products that are differentiated from

one another (that is, the products are substitutes but, because of

differences such as branding, not exactly alike). In monopolistic

competition, a firm takes the prices charged by its rivals as given andignores the impact of its own prices on the prices of other firms. In a

monopolistically competitive market, firms can behave like

monopolies in the short run, including by using market power to

generate profit. In the long run, however, other firms enter the market
http://en.wikipedia.org/wiki/Deadweight_losshttp://en.wikipedia.org/wiki/Imperfect_competitionhttp://en.wikipedia.org/wiki/Differentiation_(economics)http://en.wikipedia.org/wiki/Substitute_goodhttp://en.wikipedia.org/wiki/Monopolieshttp://en.wikipedia.org/wiki/Short_runhttp://en.wikipedia.org/wiki/Long_runhttp://en.wikipedia.org/wiki/File:Monopoly-surpluses.svghttp://en.wikipedia.org/wiki/Deadweight_losshttp://en.wikipedia.org/wiki/Imperfect_competitionhttp://en.wikipedia.org/wiki/Differentiation_(economics)http://en.wikipedia.org/wiki/Substitute_goodhttp://en.wikipedia.org/wiki/Monopolieshttp://en.wikipedia.org/wiki/Short_runhttp://en.wikipedia.org/wiki/Long_run


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and the benefits of differentiation decrease with competition; the

market becomes more like aperfectly competitive one where firms

cannot gain economic profit. In practice, however, if consumer

rationality/innovativeness is low and heuristics are preferred,

monopolistic competition can fall into natural monopoly, even in the

complete absence of government intervention. In the presence of

coercive government, monopolistic competition will fall into

government-granted monopoly. Unlike perfect competition, the firm

maintains spare capacity. Models of monopolistic competition are

often used to model industries. Textbook examples of industries with

market structures similar to monopolistic competition include

restaurants, cereal, clothing, shoes, and service industries in large

cities. The "founding father" of the theory of monopolistic competition

is Edward Hastings Chamberlin, who wrote a pioneering book on the

subject, Theory of Monopolistic Competition (1933). Joan Robinson isalso credited as an early pioneer of the concept.

Monopolistically competitive markets have the following

characteristics:

There are many producers and many consumers in the market,

and no business has total control over the market price.

Consumers perceive that there are non-price differences among

the competitors' products.

There are fewbarriers to entry and exit. Producers have a degree of control over price.
http://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Government-granted_monopolyhttp://en.wikipedia.org/wiki/Restaurantshttp://en.wikipedia.org/wiki/Cerealhttp://en.wikipedia.org/wiki/Clothinghttp://en.wikipedia.org/wiki/Shoeshttp://en.wikipedia.org/wiki/Edward_Hastings_Chamberlinhttp://en.wikipedia.org/wiki/Joan_Robinsonhttp://en.wikipedia.org/wiki/Barriers_to_entryhttp://en.wikipedia.org/wiki/Perfect_competitionhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Government-granted_monopolyhttp://en.wikipedia.org/wiki/Restaurantshttp://en.wikipedia.org/wiki/Cerealhttp://en.wikipedia.org/wiki/Clothinghttp://en.wikipedia.org/wiki/Shoeshttp://en.wikipedia.org/wiki/Edward_Hastings_Chamberlinhttp://en.wikipedia.org/wiki/Joan_Robinsonhttp://en.wikipedia.org/wiki/Barriers_to_entry


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The long-run characteristics of a monopolistically competitive market

are almost the same as a perfectly competitive market. Twodifferences between the two are that monopolistic competition

produces heterogeneous products and monopolistic competition

involves a great deal of non-price competition, which is based on

subtle product differentiation. A firm making profits in the short run

will nonetheless onlybreak even in the long run because demand will

decrease and average total cost will increase. This means in the long

run, a monopolistically competitive firm will make zero economic

profit. This illustrates the amount of influence the firm has over the

market; because of brand loyalty, it can raise its prices without losing

all of its customers. This means that an individual firm's demand curve

is downward sloping, in contrast to perfect competition, which has a

perfectly elastic demand schedule.

Oligopoly

In an oligopoly, there are only a few firms that make up an industry.

This select group of firms has control over the price and, like a

monopoly; an oligopoly has high barriers to entry. The products that

the oligopolistic firms produce are often nearly identical and,therefore, the companies, which are competing for market share, are

interdependent as a result of market forces. Assume, for example, that

an economy needs only 100 widgets. Company X produces 50

widgets and its competitor, Company Y, produces the other 50. The
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prices of the two brands will be interdependent and, therefore, similar.

So, if Company X starts selling the widgets at a lower price, it will get

a greater market share, thereby forcing Company Y to lower its prices

as well.

In an oligopoly, firms operate underimperfect competition. With the

fierce price competitiveness created by this sticky-upwarddemand

curve, firms use non-price competition in order to accrue greater

revenue and market share.

"Kinked" demand curves are similar to traditional demand curves, as

they are downward-sloping. They are distinguished by a hypothesized

convex bend with a discontinuity at the bend"kink". Thus the first

derivative at that point is undefined and leads to a jump discontinuity

in the marginal revenue curve.

Classical economic theory assumes that a profit-maximizing producer

with some market power (either due to oligopoly ormonopolistic

competition) will set marginal costs equal to marginal revenue. This

idea can be envisioned graphically by the intersection of an upward-

sloping marginal cost curve and a downward-sloping marginal revenue

curve (because the more one sells, the lower the price must be, so the

less a producer earns per unit). In classical theory, any change in the

marginal cost structure (how much it costs to make each additional

unit) or the marginal revenue structure (how much people will pay foreach additional unit) will be immediately reflected in a new price

and/or quantity sold of the item. This result does not occur if a "kink"

exists. Because of this jump discontinuity in the marginal revenue

curve, marginal costs could change without necessarily changing the

price or quantity.

The motivation behind this kink is the idea that in an oligopolistic or

monopolistically competitive market, firms will not raise their prices

because even a small price increase will lose many customers. This isbecause competitors will generally ignore price increases, with the

hope of gaining a larger market share as a result of now having

comparatively lower prices. However, even a large price decrease will

gain only a few customers because such an action will begin aprice
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warwith other firms. The curve is therefore moreprice-elastic for

price increases and less so for price decreases. Firms will often enter

the industry in the long run.

Above the kink, demand is relatively elastic because all other firms'prices remain unchanged. Below the kink, demand is relatively

inelastic because all other firms will introduce a similar price cut,

eventually leading to aprice war. Therefore, the best option for the

oligopolist is to produce at point E which is the equilibrium point and

the kink point. This is a theoretical model proposed in 1947, which has

failed to receive conclusive evidence for support.

CONCLUSION-After seeing the various forms of market we can understand

that perfect, monopoly, monopolistic ,oligopoly etc form ofmarket prevails. but mainly we will found perfect and

monopoly form of market in the competative world.
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Whereas imperfect competition a firm has some control over

the price a fact seen as a downward sloping demand curve for

the firms output.

In addition to declining costs,other forces leading to imperfect

competition are the barriers to enter in the form of legalrestrictions,i.e.patents or government regulations.

perfect competition describes markets such that no participants are large enough to hauct

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