Imperfect competitive market refers to a market structure where at least one agent among buyers and sellers, has the power to affect the equilibrium price and quantity. The four different types of imperfect competitive markets are monopoly, monopolistic competition, oligopoly and monopsony.
Monopoly is a market structure where a single firm sells goods or services to a large number of buyers as no close substitutes are available. The main features of monopoly market structure are: Single seller and large number of buyers, Restriction on entry of new firms, No close substitutes, Full control over prices, etc.
Monopolistic competition is found in the industry where there is large number of small sellers, selling differentiated but close substitute products. The different features of monopolistic competition are product differentiation, large number of firms, free entry and free exit of firms, non-price competition, elastic demand curve, etc.
A market structure in which there are a few firms in industry producing either homogeneous products or closely differentiated products is called oligopoly. The different features of oligopoly market structure are as follows:
Large number of buyers
High degree of interdependence
Formation of cartels
The difference between various market structures can be viewed in terms of number of sellers, entry and exit of firms, nature of product, nature of profit, etc. Equilibrium condition of the firm can be studied under two approaches:
Total revenue and total cost approach
Marginal revenue and marginal cost approach
Monopsony is a market situation in which there is only one buyer of a product or factor and there are many sellers. The main features of monopsony are Single Buyer, Large number of Sellers, Specialised product or input, lack of mobility, etc.