wants at the going market price, where firms must settle for zero economic profit in the long run Nor is it the world of monopoly, where a single firm maximizes its profits, believing that barriers to entry will keep out wouldbe competitors, at least for a while This is the world of imperfect competition, one that lies between the idealized extremes of perfect competition and monopoly It is a world in which firms battle over market shares, in which economic profits may persist, in which rivals try to outguess each other with pricing, advertising, and product-development strategies Unlike the chapters on perfect competition and monopoly, this chapter does not provide a single model to explain firms’ behavior There are too many variations on an uncertain theme for one model to explain the complexities of imperfect competition Rather, the chapter provides an overview of some of the many different models and explanations advanced by economists for the behavior of firms in the imperfectly competitive markets The analytical tools you have acquired in the course of studying the models of competitive and monopoly markets will be very much in evidence in this discussion The spectrum of business enterprise ranges from perfectly competitive firms to monopoly Between these extremes lies the business landscape in which the vast majority of firms—those in the world of imperfect competition—actually operate Imperfect competition is a market structure with more than one firm in an industry in which at least one firm is a price setter An imperfectly competitive firm has a degree of monopoly power, either based on product differentiation that leads to a downwardsloping demand curve or resulting from the interaction of rival firms in an industry with only a few firms Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 568