Topic 7:: "Where's The Competition in Perfect Competition?"

TOPIC 7:
“Where’s the Competition in

Perfect Competition?”
Phs. Nguyen Xuan Dong
GROUP 5
Luong Thi Yen
Dinh Le Ngoc Minh Dao Phuong Linh
Dao Thi Hoai Duong Ngô Thi Quynh Lam
Nguyen Thi Huong Giang Nguyen Duong Viet Ha
1
.
The market structure of perfect competition has a lot of
ideal qualities–hence the name perfect. For example,
perfectly competitive firms are productively efficient, and
perfectly competitive markets are allocatively efficient. It TOPIC
is, however, difficult to find many examples of perfect
competition in the real world. Perfect competition is really
a benchmark against which we compare other market
structures in the real world.
2
3
Firms that are said to be perfectly competitive face
stiff competition from other competitors who
provide identical services.
All businesses face two realities: no one is required to buy their
products, and even customers who might want those products
may buy from other businesses instead.
Perfectly competitive enterprises are forced to accept the

How much actual market's current equilibrium pricing due to market pressure
competition occurs in
perfectly competitive increase the price of their goods, they will lose all of their
markets? sales to their competitors
Consider “the agricultural market, growing a crop

might be challenging at the beginning, but producers
must also contend with severe rivalry
Farmers compete with tens of thousands of others that sell a similar

commodity. It makes no difference how items are cultivated unless
they are certified organic, and how they are packaged or marketed
makes no difference
4
The claim that there is actually no competition between firms

in a perfectly competitive market is False.
Some make the claim
that there is actually Perfectly competitive markets exhibit the following
no competition characteristics.
between firms in a
perfectly competitive Producers and No barriers to entry
market. Do you agree Perfect knowledge consumers maximise into or exit out of the
their self interest market
or disagree with this
claim? What is your
reasoning?
No single firm can no need for
many firms in the
influence the market government
market – too many to
price, or market regulation and no
measure
conditions. externalities
In the grand scale of world agriculture, farmers face competition
from thousands of others because they all sell identical products.
They face stiff competition from other competitors who grow the
same crops.
All of them charge the same price since they are price takers, if
. one tries to charge more, their customers would simply buy from
someone else for all products are the same.
All businesses face two realities: no one is required to buy their

products, and even customers who might want those products
may buy from other businesses instead
5
6
COMMENTS ON POST 1
John Sloman (6 November, 2013) “The curse of the bump harvest”
The article gave examples of a bountiful harvest of Australian agricultural products
The supply problem is not

A bumper harvest should be just one of increased Here farmers face the
good news for farmers domestic supply: cheap double disaster of low
food imports, often of output and low prices.
inferior quality, have been
flooding into Australia
COMMENTS IN POST 2 - “Ebay: Towards A Perfectly Competitive Market” by Joshua Chang
1 PURPOSE
JOSHUA CHANG
Traditional markets have
asymmetrically distributed
2
Purpose of this paper is to explain how information that may experience
factors in eBay create an increasingly market failure. EBay is a trading
efficient marketplace that drives it platform that greatly improves this
towards the conditions of a perfectly distribution by providing complete
marketplace information to both
competitive market.
buyers and sellers, diminishing the
problem of asymmetrical
3 ROBERT KUTTANER
information distribution
The Internet is a nearly perfect market

because information is instantaneous
and buyers can compare the offerings
of sellers worldwide. The result is
fierce price competition, dwindling
product differentiation, and vanishing
brand loyalty
7
Many factors in EBay‟s market suggest key conditions
of a near perfectly competitive market
1 2 3 4
Low barriers to entry No financial cost in

registering to buy or sell, Information is
and exit for buyers and
and registration can be universally available EBay’s interface is simple
sellers in eBay
done with minimal
computer knowledge and
can be carried out quickly
8
THANK
YOU

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TOPIC 7:

“Where’s the Competition in

Perfectly competitive enterprises are forced to accept the

Consider “the agricultural market, growing a crop

Farmers compete with tens of thousands of others that sell a similar

The claim that there is actually no competition between firms

All businesses face two realities: no one is required to buy their

The article gave examples of a bountiful harvest of Australian agricultural products

The supply problem is not

The Internet is a nearly perfect market

Low barriers to entry No financial cost in

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