Monopoly and competition: a classification of market positions

The concepts of monopoly, imperfect competition, monopolistic competition, oligopoly, etc., as used in recent writings are in need of re-definition. The classification of market positions suggested here distinguishes, first of all, "sellers conscious of their rivals' reactions" from " sellers heedless of rivals' reactions." The first group is divided into duopoly and oligopoly with differentiated and with standardized products; the second group is divided into monopoly, monopolistic competition and pure competition. The terms "perfect" and "imperfect" are used to denote immobility of factors, degree of friction, speed of adaptation; they refer, therefore, to potential changes in demand for the product of individual sellers due to a flow of factors into or out on an industry. Competition may be pure and perfect, pure and imperfect, monopolistic and perfect, monopolistic and imperfect; the first in each of these pairs of adjectives refers to the shape of the demand curve, the second to its position in relation to the cost curves. Subtle distinctions such as those between "potential competition of the imperfect monopolist," "monopolistic imperfect competition," and "oligopoly with differentiated produucts" can be made more easily on the basis of the classification suggested here.