Imperfect market theory manly pertains to imperfect market forms, namely, monopoly, monophony, and oligopoly.
Characteristics of imperfect market forms
The number of sellers is few
The product is not homogenous
Same price do not exist in the market.
Types of imperfect market
Monopoly- A situation in which a single owner owns all or mainly all of the market for a particular kind of product or service. There exist a barrier to exit and a barrier to entry in this kind of a market. (for example, vast economies of scale, barriers to entry, or governmental regulation). In such an industry structure, the producer will often produce a volume that is less than the amount which would maximize social welfare.
Characteristics of monopoly market· Single Seller· Price Discrimination
· Homogenous Product
· No entry of New Seller
Determination of Monopoly EquilibriumP = ATC but each firm still facing a downward sloping demand curve
Monopolistic Competition: A market framework in which a number of or so many sellers each make alike, but to some extent distinguish goods. Each manufacturer can put its MRP and capacity devoid of disturbing the market place as a whole.
Characteristics of Monopolistic Competition· Many Sellers· Free entry in the market
· Prize change to capacity of seller
· Differentiate Product.
Determination of equilibriumOligopoly-A market conquered by a tiny amount of contestants who are capable to jointly apply control over market prices and supply.
Characteristics of Oligopoly· Few sellers (may be three, four etc).· Homogenous product
· Without charge admission in market
Problems with Oligopoly• Issue of interdependence• Cournot mock-up of duopoly
• Stackelberg and cost leadership mock-ups
• Cournot-Nash equilibrium
• One shot and repeated games
• Evolutionary game theory and evolutionary stable strategies.
• More modern game theory approaches- oligopoly as a prisoners' dilemma game
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Monopolistic competition and oligopoly
Monopolistic competition and oligopoly
Resource Markets & Product Markets
Three factors of production: Labor, Capital, and Land Two payment types: Resource Markets and Product Markets
Resource and product markets.
Resource markets and product markets are the two payments int he free market circular flow model. Both of these markets are for businesses and households.
Monopolistic competition and oligopoly
Resource Markets & Product Markets
The three factors of production are capital, labor, and land. Two types of payments are from firms and households. These payments go to the goods and services markets.
consumer market and the business-to-business market.
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Resource markets and product markets are the two payments int he free market circular flow model. Both of these markets are for businesses and households.