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SECTION 2
Imperfectly Competitive Markets
Essential Question:
 Identify the two types of market structures
that are imperfectly competitive, explain the
five different “price” issues that occur in
imperfectly competitive markets, describe
the characteristics of a monopoly, list the 4
different types of monopoly.
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SECTION 2
Imperfectly Competitive Markets
Imperfectly Competitive Markets:
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 These markets have less competition (fewer
sellers).
 The products in these markets usually require a
greater level of skill or resources in the
producer to make. (it’s not easy for just anyone
to join)
 The most common examples of imperfectly
competitive markets are oligopoly and
SECTION 2
Imperfectly Competitive Markets
Structure of an oligopoly:
 Oligopoly is a type of non-competitive market
structure with only a few large sellers.
 only a few large sellers, and they control most of
the production of a product
 sellers offer identical or similar products
 new sellers find market entry difficult
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SECTION 2
Imperfectly Competitive Markets
Imperfectly competitive markets and
Price:
 Since there are few sellers or one seller,
producers have more control over the prices of
their goods. Within oligopolies are some “price
issues”
 Interdependent Pricing- usually when one
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company changes price, the other will follow
 Price Leadership- This is when the largest
company sets the price standard for others to
follow
SECTION 2
Imperfectly Competitive Markets
Imperfectly competitive markets and
Price (Cont.):
 Price War- This is when two companies “fight”
each other by lowering their prices back and forth.
This is dangerous since it can cause a business to
fail
 Collusion- This is where producers secretly agree to
set prices higher. ILLEGAL
 Cartel- an organization where producers openly
practice collusion. ILLEGAL
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SECTION 2
Imperfectly Competitive Markets
Characteristics of a monopoly:




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one seller
no close substitute goods
difficult to enter market
If a company creates or perpetuates a
monopoly by preventing competition, the
government usually interferes as this is bad
for public good.
SECTION 2
Imperfectly Competitive Markets
Types of monopolies:
 natural monopolies—one large seller
produces a good or service most efficiently
 geographic monopolies—isolated
geographic location attracts only one seller
 technological monopolies—one producer
owns the technology that created the market
 government monopolies—government is
the sole seller of a product
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