Semi-perfect Competition

Abstract

I use the phrase ‘semi-perfect competition’ to describe a combination of (approximately) perfect competition in product markets with imperfect competition in the supply of technology and of the hired factors of production. The combination of these perfect and imperfect ingredients creates a ‘hybrid’ type of competition, which is more realistic than perfect competition and, for that reason, more instructive and more theoretically useful. This hybrid type of competition is also an essential theoretical stepping stone towards the construction of a realistic model of imperfect competition in the normal sense. I shall start by considering the effects of imperfect knowledge of technology, and then examine the effects of imperfect competition in factor markets. The final section of this chapter will be concerned with the equilibrium of an industry operating under conditions of semi-perfect competition.