imperfect market

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Imperfect market

Economic environment in which the costs of labor and other resources used for production encourage firms to use substitute inputs that are less costly.

Imperfect Market

1. See: Market inefficiency.

2. A market where costs are too high, encouraging producers either to stop producing or to find ways to lower costs. For example, if labor costs are too high in an imperfect market, producers have an incentive to lower salaries, lay off employees, or cease operations altogether.

imperfect market

References in periodicals archive ?
It is only in imperfect markets that good investments may not be funded.
Without arguing the rationality or irrationality of the lenders' collective behavior, the existence of imperfect markets seems indisputable.
While competition is generally regarded as an effective solution for many economic problems, its application to imperfect markets, such as the savings and loan industry, has inevitably produced undesirable consequences.
recession, but imperfect markets are also to blame, according to Wharton professors and investment experts.
In addition to these more general, theoretical topics, papers also discuss more geographically specific topics, including soil nutrient dynamics in integrated crop-livestock systems in the highlands of Ethiopia, rural development and sustainable land use in the hillsides of Honduras, resource use efficiency on owned and sharecropped plots in northern Ethiopia, changing gender roles in household food security and rural livelihoods in Bangladesh, and land and labor market participation decisions under imperfect markets in China's Jiangxi province.
It tends to operate in imperfect markets, since most of its products have little or no competition in their initial stages and it sells any successful products on before a perfect market is created.
Profit maximisation enables the setting of prices that will maximise profits in an imperfect market, it is dependent on good market data to establish the relationship between price and demand.
Section III formulates the imperfect markets model based on the notion of virtual prices and demonstrates that perfect markets are a special case of this more general analytical framework.
Several additional examples of imperfect markets can be cited.
Finally, a section on imperfect markets presents discussion of externalities, asymmetric information, incentives and organization, and regulation.
Beginning with an introduction to modern economics, the authors explain perfect and imperfect markets, and issues in public policy, with chapters on demand, supply, and price; consumption; cost; competition; labor, capital, and competitive markets; monopoly and oligopoly; government policies; strategic behavior; the product market; the public sector; environmental economics; international trade and policy; technological change; and the student's guide to investing.
However, in an imperfect market, self-interested managers may be motivated to divest assets at a cost to shareholders.