Competition: Difference between revisions
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imported>Nick Gardner (Revised first paragraph) |
imported>Nick Gardner (Revised first paragraph) |
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large enough to enable him to influence the price of that category of product. | large enough to enable him to influence the price of that category of product. | ||
(b) ''No collusion.'' Each supplier acts independently. | (b) ''No collusion.'' Each supplier acts independently. | ||
(c) ''No barriers to entry.'' There is nothing to prevent any new supplier from entering the market for any category of product. | (c) ''No barriers to entry.'' There is nothing to prevent any new supplier from entering | ||
(d) ''Homogeneity of product.'' All suppliers of each category of product are known to all buyers to supply identical products. | the market for any category of product. | ||
(d) ''Homogeneity of product.'' All suppliers of each category of product are known to all | |||
buyers to supply identical products. | |||
Suppliers are assumed to maximise their products and buyers are assumed to seek value for money. After a settling-down period, a market price emerges for each category of product. A supplier who attempts to sell a product above that price will find no buyers and a buyer who attempts to buy a product at below that price will find no sellers. | Suppliers are assumed to maximise their products and buyers are assumed to seek value for money. After a settling-down period, a market price emerges for each category of product. A supplier who attempts to sell a product above that price will find no buyers and a buyer who attempts to buy a product at below that price will find no sellers. | ||
Revision as of 03:19, 13 September 2007
Perfect Competition
The hypothetical world with which the concept of perfect competion is concerned is one in which the market for each category of product has the following characteristics:
(a) All market shares are small. No supplier enjoys a share of the market which is
large enough to enable him to influence the price of that category of product.
(b) No collusion. Each supplier acts independently.
(c) No barriers to entry. There is nothing to prevent any new supplier from entering
the market for any category of product.
(d) Homogeneity of product. All suppliers of each category of product are known to all buyers to supply identical products.
Suppliers are assumed to maximise their products and buyers are assumed to seek value for money. After a settling-down period, a market price emerges for each category of product. A supplier who attempts to sell a product above that price will find no buyers and a buyer who attempts to buy a product at below that price will find no sellers.