Learn about the concept of types of competition in the market, their dynamics and their behavior through this article .
Types of Competition
The types of competition are defined as the way in which the economic agents that participate as sellers and buyers of a specific good or service compete in the market.
The competition forces the actors to execute and apply actions, which will determine the strength, the level of organization and strategies that the companies have to obtain an optimal and competitive level in the market. That is why there are different types of competition, among which we can refer to perfect and imperfect competition.
Perfect Competition
Broadly speaking, we can indicate that perfect competition occurs in a market when none of the companies that participate in it or even external agents is capable of influencing prices. Its main characteristics are:
- The number of competing companies is high.
- Each company can sell the amount it wants of the products it sells.
- The companies know the price of the rivals and the buyers know the offers of the producers.
Perfect competition is when the behavior of the market is the result of the participation of innumerable competitors who can offer their products and establish their prices and offers.
Imperfect competition only exists in theory because this market model doesn't exist in practice or reality. We invite you to discover what CIRBE is by clicking on the following link.
Imperfect Competition
Imperfect competition occurs when any of the agents (be it the State or the companies) has control over the prices of goods and services in an industry sector or in a specific market and it is when the agents that compete in the The market, either on the supply side or on the demand side, can manipulate the supply of products and the establishment of prices.
Types of imperfect competition
There are some types of imperfect competition. Among these types we can mention the following.
Monopoly
The monopoly situation is the most extreme degree of imperfect competition. This occurs when in the industry or the market the only existing producer falls on a specific company; Consequently, it has absolute control and management of the market and the ability to set the price at its convenience.
duopoly
The term duo refers to two. This means that the monopoly of the market is monopolized by two companies. These stipulate the price and offer of the product or service. In this case, consumers do not have a range of options to buy the product or service. Therefore, they cannot make comparisons of quality, prices, among others.
Oligopoly
An oligopoly occurs when, despite being few in number, a few competitors have influence over product prices. It's no longer a single company that holds power over a particular industry or market; instead, there are multiple competing players. If you'd like to learn more about this fascinating topic, I invite you to check out this link: Sales Strategy
