Imperfect competition describes a market in which the conditions that characterize a perfect competition are not present.

To understand imperfect competition you must first understand economics of it and each aspect it entails; the production, distribution and consumption of products and services.

With that said, an imperfect competition is any situation where the conditions make for less than a perfect competition.

A perfect competition would be when no single party can influence the price of a product or service that they sell. Basically, no one company has more control over the market than others and there are an infinite number of buyers and sellers. Meaning, buyers have the willingness and the ability to buy a product set at a specified price and manufacturers are willing to supply it. In an imperfect competition, some of these factors are not present.

There are several forms of imperfect competition; for instance, in a monopoly, when there is only one seller of a product or service or in an oligopoly, when there are several sellers of a good. In a monopolistic competition there are many sellers producing products that are differentiated. In a monopsony there one buyer of the good while in an oligopsony there are several buyers of the good.

Information asymmetry is also another form of an imperfect competition as there becomes an imbalance of power when one party is privy to better information of a product that its competitors are not aware of. This makes for an unfair advantage which could affect the competitive market.

An imperfectly competitive example would be jobless recovery; there is still a high level of unemployment rates although the economy is experiencing growth, especially after a recession. This is in large part due to the fact that employers are in the process of creating new jobs but it takes time to achieve after the recession.

Though many will agree that a perfectly competitive market can’t be truly achieved, the model is considered to still be a beneficial model.