Perfect and imperfect competition: the nature, characteristics, basic models

perfect and imperfect competition, their forms, models, features, has for several centuries, excite the minds of the world's leading economists.

competition, as it is known, is the most important feature of a market economy.It is a process of interaction between buyers and sellers, in which the latter there is nothing unlimited freedom of choice, with each of the vendors have to prove to him that his option is most acceptable.

competition have long attracted a variety of academic economists, but if no one had doubted its capacity to regulate the market, in recent decades, louder voices that should distinguish such thing as a perfect and imperfect competition.

The fact is that for a long time, advocates of the so-called free market claimed that he can solve all the economic problems of a society, to determine the vector of development of the state.The core feature of this economic model, they saw pure competition, in which the production of a product would be engaged in the largest possible number of companies and individuals, and the contribution of each in the total production would be so small that none of them alone could nothave a decisive influence on the formation of prices.

addition to the above, the characteristics of the market of perfect competition as the alleged lack of any major expenses for advertising and promotion of goods to other markets.All the competition between producers had to be carried out solely on the level of prices and quality of goods.Any company at any time had the opportunity to leave the market without consequences for themselves.

However, as history has shown, the market was pure illusion rather than reality.Talk about the fact that the perfect and imperfect competition is equally inherent in any market, and the predominance of one form or another depends on the level of economic development of society, proved no more than wishful thinking.Imperfect competition, as it turns out, has played in the life of humanity more important role.

now known following the model of imperfect competition:

1. Competition between large firms-monopolists.This model is specific to the global economic space when one or the other sector was divided between large companies, each of which has all chances to become the sole vendor in a single country.This model is best suited for understanding the dilemma of "perfect and imperfect competition."At the same time, if we take the whole world market as a whole, there is not a single manufacturer has no decisive levers that could affect pricing.A typical example - the market of sportswear and equipment.

2. Oligopoly.This model assumes that the market for certain goods or services is divided between a small number of large companies that are likely to face each other in the league.As for prices under oligopoly, the companies agree on the systemic concepts, while the value of non-core products can be different.Example - the market for the production of non-ferrous metals.

3. Monopoly, when the market operates one player, and determines the price and the quality and range of goods and services.No other company in this economic space is not allowed, advertising producer almost not needed.Example - OAO "Gazprom".