The Theory of Imperfect Competition Imperfect competition Firms are aware that they can influence the price of their product They know that they can sell more only by reducing their price Each firm views itself as a price setter, choosing the price of its product, rather than a price taker The simplest imperfectly competitive market structure is that of a pure monopoly, a market in which a firm faces no competition Copyright C 2003 Pearson Education, Inc Slide 6-8Copyright © 2003 Pearson Education, Inc. Slide 6-8 ▪ Imperfect competition • Firms are aware that they can influence the price of their product. – They know that they can sell more only by reducing their price. • Each firm views itself as a price setter, choosing the price of its product, rather than a price taker. • The simplest imperfectly competitive market structure is that of a pure monopoly, a market in which a firm faces no competition. The Theory of Imperfect Competition