An imperfectly competitive market refers to rivalous competitive behaviour among firms that have a significant degree of market power. Joan Robinson of Cambridge University introduced the term ‘imperfect competition’. These facts explain why competition often becomes imperfect. In addition, consumers have heterogenous (varied) tastes, exhibiting preferences for a wide variety of goods and services with varying characteristics. However, in most situations information and mobility are not costless. Also, as supply and demand conditions change in individual markets, resources are assumed to move between markets until equilibrium is once again reached. Decision makers - both consumers and producers-possess perfect information regarding the choices they must make. In a perfectly competition market information and mobility of factors of production and commodity are assumed to be costless. There are no restrictions on exit, legal or otherwise. Freedom of exit means that any existing firm partly is free to stop production and leave the industry if it so desires. There are no legal or other restrictions on entry. There are no barriers to the entry of new firms in the industry. Freedom of entry means that a new firm is free to start production if it so desired. The fourth assumption relates to the whole industry. Assumptions 1, 2 and 3 relate to individual’ firms.
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