Manchester City boss Mark Hughes accepted that his team had been second-best in their 1-0 derby defeat by Manchester United at Eastlands.
A Wayne Rooney goal shortly before half-time proved decisive, with City unable to capitalise on the sending-off of Cristiano Ronaldo midway through the second half.
Hughes told the club's official website: "We have to compete against Manchester United and in the near future we will. But at the moment they are a better team than us.
"We are going in the right direction, but this is not going to happen overnight for us and in the first half we showed them too much respect.
"We sat off too much and allowed them too much space to play and dictate the tempo of the game. That obviously wasn't our gameplan, we wanted to force the issue.
"I'm disappointed that we didn't get to half-time level and gave the goal away on 42 minutes, but we changed a few things around and regrouped in the second half and we were better for it.
"We got a second wind and forced the issue more, but the sending-off didn't help us as much as people would have thought.
"They very quickly got people behind the ball and defended our efforts to attack."