Business Activity: Market Structures- Perfect & Imperfect Markets by @swaylee

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Greetings Everyone,
It's Rasheed once again with another learnwithsteem special edition. As a political Economist that loves the countries economy, I am here today to talk about perfect and imperfect markets. This topic is a really wide one especially when it comes to the imperfect markets as it's types are sub-divided into various other concepts so I would put alot into this lecture and make it worth while. Let's get started

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Perfect Competition/ Market

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Here the markets are defined by their features. A perfect Market is a market situation where there are no barriers to entry and exit, absence of monopoly or other forms of market manipulation and there is full and perfect information between buyers and sellers. It can also be called a perfect competition. It is said to be at equilibrium when the quantity supplied is equal to the quantity demanded at a specified price. Perfect markets are non existent in the real world and are just based on a theory as all markets in the world today are Imperfect. The demand curve of a perfect competitive market is perfectly elastic or infinity elastic.

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Features of Perfect Market

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✓ Absence of Monopoly
Buyers and sellers are free to interact with each other with no barriers or restrictions as to what can be sold and the amount of people to sell to.

✓ They are price Takers
The buyer or seller doesn't make the prices at which goods can be bought or sold. It is solely influenced by the forces of demand and supply.

✓ Large number of firms
Here there are many firms selling different products and these products constitution a fraction of the products total supply hence no firm has absolute power over the market.

✓ Homogeneous Products
There is this presence of similar products meaning that products in the market are close substitutes for one another.

✓ Free Entry & Exit into and out of the Market
Producers/ suppliers are free to enter into or exit the market whenever they feel like without prohibitions.

✓ Perfect Information/ Knowledge
All the information about the transaction and the product is disclosed between the buyer and the seller.

✓ Perfect mobility of the factors of production
The factors of production here are allowed to move freely from one geographic location to another or from one occupation to another.

✓ No transaction costs, no promotion costs and no transportation costs.

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Imperfect Competition/ Market

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They are considered as an economic structure which contradicts the perfect Market because they are almost the opposite in a couple of features. Here there are many sellers selling heterogeneous goods i.e the goods are not similar with each other. Any market situation that does not fall under the characteristics of the perfect Market is classified as an imperfect market. Here there is a high barrier to entry and exit and no perfect information. Imperfect markets are often called market failures.

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Types of Imperfect Competition/ Market

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Monopoly
This is a type of imperfect market where an individual or firm controls the total output of a good with no close substitutes. It is characterized by price discrimination, existence of a simple firm because the producer has no rivals because he/she sells unique products.

Monopolistic competition
Is a type of Imperfect Competition that offers products or services that are similar/ differentiated products but are not close substitutes. They compete for market shares. It is a combination of pure Monopoly and perfect competition.

Oligopoly
This is a market structure where there are few sellers selling homogeneous and differentiated products. Various types of oligopoly includes competitive oligopoly, partial, open, closed oligopoly and so on.

Monopsony
Is a market structure where there exists plenty sellers and one person buying these products.

Duopoly
This is a market structure where the market is dominated by 2 suppliers who sell the same commodity or provide the same services.

Oligopsony
Is a market situation where only a small number of buyers exist for a product. All the types of Imperfect Competition here are gotten and exist in real life situations.

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Features of Imperfect Competition/ Market

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✓ Product differentiation
As I mentioned earlier the products bought and sold here might to similar but not identical hence they are not perfect substitutes.

✓ They are price makers
Here their prices are not influenced by the forces of demand and supply but instead they fix their prices by themselves since they are selling products which are unique and identical to them.

✓ No free entry and exit
There are criterias to meet before one can enter the market or exit it so it is safe to say that there are barriers to entry and exit in an imperfect market.

✓ Combination of Monopoly & competition
Although each seller might deal in unique products but there is still competition amongst other sellers. For instance Apple is competitive but still an imperfect market.

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Distinction between the perfect & Imperfect Competition/ Market

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Perfect Competition	Imperfect Competition
There is freedom of entry and exit into and out of the market	There are barriers that restrict free entry and exit in the market
There similar products hence they are close substitutes for one another	There is product differentiation hence each producer deals in unique products and they are no close substitutes
They are price Takers because they do not determine the price of their products or services	They are price makers because the fix the prices they want for their products or services
No selling costs involved in this market	There are selling costs involved in this market
it is a fictional and non existent market that was proposed by economists	it is a real life market situation and what we experience in our everyday life market

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Conclusion

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I guess this brings us to the end of today's lecture. I hope we have been able to learn a thing or two from this lecture. Perfect markets don't exist but from the features here it seems too far fetched but wouldn't be a bad idea. I would love to see how it would be when this market eventually happens. Thanks for reading ⭐.

Post Name:	Business Activity: Market Structures- Perfect & Imperfect Markets by @swaylee
Owner's name :	@swaylee
Business Address	Barnawa, Kaduna, Nigeria
About us	Link

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