Imperfect Competition

In the real world, we’re all imperfect, and competition is as well. Imperfect competition is...well...not perfect competition.

What's perfect? Well, it exists when there are a lot of sellers and buyers, there's no product differentiation, buyers have perfect knowledge about all the products, entering and exiting the market is easy, and firms are price takers (instead of price makers, which would be monopolistic).

Since perfect competition doesn’t exist in real life, pretty much all real-life markets are imperfectly competitive. There’s often one (monopoly) or a few (oligopoly) firms, and firms definitely differentiate their products (think: Coke vs Pepsi, coffee vs frappa-mocha-chino-latte with a shot of raspberry snot, etc.). Consumers usually don’t have perfect information about the products they’re buying, both because of the time it would take, and because not all that info is available anyway. Entering most markets requires some up front costs, too.

The only thing perfect competition and imperfect competition do have in common is that there are buyers seeking to buy things they want, and sellers seeking to maximize profits.