In economics, there is a variety of descriptors of types of market competition, most of which relate to competition amongst producers or sellers of goods and services: 'perfect', 'imperfect', 'monopolistic', 'duopolistic' 'oligopolistic' are the five most likely to be encountered. Perfect competition is the modelling of a situation in which there are sufficiently large numbers of producers for the activity of any one not to affect the market price. It is sometimes called 'price-taking'. Imperfect competition refers to a situation in which the activity of any one of several producers will affect the price. Monopoly stands at the end of the spectrum farthest from perfect competition and refers to a situation in which there is a single seller. A duopoly exists when there are but two producers. An oligopoly exists when there are just a few sellers. The
idea that there is a direct link between the number of sellers and the 'amount' of competition is not a very good one. It is usually more insightful to consider the nature of the influence that one producer may have on another, or on consumers or employees, and the ease of access to information about competitors' activities and plans, than simply to consider numbers. Nonetheless, within broad bands, numbers of producers in similar fields do form the basis for measuring the concentration ratio of an industry. See also Cartel.
There can also be degrees of competition between buyers. For example, one of the arguments for concentrating purchasing power for health care in the hands of a managed care organization, or the state at regional or national level, is that this creates substantial influence over the prices that can be obtained from producers and the wages and salaries that must be paid to health service professionals. When buyers are sufficiently large in relation to the market, the condition is termed 'monopsony'.
Economists tend to regard competition with favour, though there are some markets in which competition can be extremely damaging, of which the most important is probably the insurance market. See Risk Selection.
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