Key Words and Phrases

to combat	боротися проти чогось
foster competition	заохочувальна конкуренція
to break up	закривати, розпускати
prison sentences and fines	тюремне ув'язнення та штрафні санкції
consummate	завершувати, закінчувати
publicly owned enterprise	підприємство, що належить державі або місцевим органам влади (муніципалітету, владним органам штату)
interstate commerce	торгівля між штатами

Exercises on the text:

Ex. 1. Read and translate the text.

Ex. 2. Answer the following questions:

1. What three alternative approaches were tried to limit monopolies?

2. When was a common antitrust law adopted and by what country?

Ex. 3. Give Ukrainian equivalents for the following words and word combinations:

a great debate over monopoly; the debate has waxed and waned ever since; antitrust legislation; the public ownership; public utility regulation; to prevent monopoly from developing; far-reaching antitrust settlement; to prohibit conspiracies; to pay damage awards; ambitious effort; to consummate mergers; counter parts; to prevent the reemergence; contemplate the adoption of antitrust laws.

Ex. 4. Fill in the blanks with noun, verb or adjective forms. Use your dictionary if necessary.

	Noun	Verb	Adjective
	design	designate	designed
	regulation	—	—
	—	create	—
	—	—	authoritative
	—	—	effective
	prevention	—	—

Ex. 5. Give your opinion of this text. What problems are raised in this text? unit 23

Imperfect Competition

What Do We Mean by Imperfect Competition?

I. Many Small Sellers and Buyers

Suppose that, instead of many sellers, there are only a few, or even one. Each seller now provides a substantial part of the market supply. As a result, the market price will be affected whenever he varies the amount he supplies of the commodity. In other words, he is faced with a downward-sloping demand curve.

Similarly, on the buying side, when any buyer takes a significant proportion of the total market supply, he will be faced by a rising supply curve.

In both cases we have some element of "imperfect competition". As we shall see, a downward-sloping demand curve has particular significance as regards marginal revenue.

II. Homogeneous Product

Products may not be homogeneous. The seller may split up the market to some extent by product differentiation, or goodwill. The result will be that even though he raises his price a little, he still retains some of his customers. Again he faces a down-sloping demand curve. Nevertheless, there may still be freedom of entry to the "industry".

III. Perfect Knowledge, Free Entry and Perfect Mobility of the Factors of Production

A breach of any of these conditions can give rise to demand or supply curves which are not perfectly elastic. Consumers, for instance, may not have complete knowledge of prices ruling elsewhere, e.g. in retail markets. Thus sellers can raise their price without losing all their customers. Similarly, there may not be free movement into the industry. This may arise when again outside firms do not have complete knowledge of the profits being made by existing firms. Or entry may be legally prohibited or made impossible by the inability to obtain essential factors of production. In such cases, existing firms can combine to exert some control over the market supply.

Thus, whenever any of our conditions for perfect competition is broken, some form of "imperfect competition", indicated by a down-ward-sloping demand curve or an upward-sloping supply curve facing the individual seller or buyer, results.

Forms of Imperfect Competition

There are many "shades" of imperfect competition. At one extreme, we have a single producer of a certain product; at the other, the only difference from perfect competition is that firms in the industry are each producing a slightly different brand. The first we call "monopoly", the second "monopolistic competition". In between, we can have just a few sellers of the same or of a slightly different product ­– "oligopoly". The broad market forms are shown in Figure 1.

FIGURE 1

Market Forms

P erfect Competition		Monopolistic Competition		Oligopoly		Monopoly
A large number of buyers and sellers		"Competition among the many" -many sellers		"Compe-tition among the few" –few sellers		One seller
Free entry		Free entry in theory		Limited entry		No entry