Number of actual or potential competitors
Few sellers whose decisions are directly related to those of competitors
Consumers perceive differences among the products of various competitors
High or low, depending on entry and exit conditions
Low-cost information on price and product quality
Restricted access to price and product-quality information; cost and other data are often proprietary
High entry or exit barriers because of economies of scale, capital requirements, advertising, research and development costs, or other factors
Potential for economic (above-normal) profits in both short and long run
Automobiles, aluminum, soft drinks, investment banking, longdistance telephone service, pharmaceuticals
Conditions of entry and exit Easy entry and exit
Economic (above-normal) profits in short run only; normal profit in long run Clothing, consumer financial services, professional services, restaurants tically competitive markets, only difficult-to-enter oligopoly markets hold the potential for long-lasting above-normal returns.
In sum, firms in imperfectly competitive markets have the potential to earn economic profits in the long run only to the extent that they impart a valuable degree of uniqueness to the goods or services provided. Success, measured in terms of above-normal rates of return, requires a comparative advantage in production, distribution, or marketing that cannot easily be copied. That such success is difficult to achieve and is often rather fleeting is obvious when one considers the most profitable companies in America.
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