Perfect competition. Examples of perfect competition

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2019-04-11 05:20:28

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Improvement of production, reduction of production costs, automation of all processes, optimization of the structure of enterprises – all of this is essential to the development of modern business. What is the best way to force businesses to do that? The market.

The market is the competition that occurs between companies that produce or sell similar products. If there is a high level of healthy competition, for the existence on this market need to constantly improve product quality and reduce total costs.

The Concept of perfect competition

Perfect competition, examples of which are given in the article is the antithesis of monopoly. That is, a market in which there is an unlimited number of sellers that are engaged in the same or similar goods and thus cannot influence its price.

The state should not influence the market or to engage in a full regulation, as this may influence the number of sellers and volumes of products on the market that is immediately displayed on the price per unit of product.

perfect competition examples

Despite seemingly ideal conditions for doing business, many experts are inclined to believe that in real conditions in the market for a long time can not exist perfect competition. Examples that confirm their words, in history, has happened repeatedly. The end result is the market has become either an oligopoly or some other form of imperfect competition.

Perfect competition may lead to decline

This is because in the long run to constantly decrease prices. And if the human resource in the world is large, that technology is very limited. And sooner or later the company will move to what will be upgraded all fixed assets and all production processes and the price will still fall due to competitors ' attempts to gain a bigger market.

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market of perfect competition examples

And this is will lead to the functioning on the verge of break-even point or below it. To save the situation it will be possible only by the influence of outside market.

Main features of perfect competition

The following features, which should have a market of perfect competition:

- a large number of sellers or producers. That is all the demand that is on the market, should not be covered by one or more enterprises, as in the case of monopoly and oligopoly;

products in this market must be either homogeneous or interchangeable. It is implied that the sellers or manufacturers make such a product that can be completely replaced by products of other market participants;

- the prices are set only by the market and depend on demand and supply. Pricing should not influence neither the state nor specific sellers or manufacturers. The price of the goods should determine the cost of production, level of demand and proposals;

- there should be no barriers to exit or entry to the market of perfect competition. Examples can be the most different from the sphere of small business where not created special requirements and do not need a special license: the Studio, services, Shoe repair, etc.;

- there should be no other influences on the market from the outside.

Perfect competition is extremely rare

In the real world it is impossible to give examples of firms in perfect competition because of the market, which operates according to such rules, simply no. There are segments that are as close as possible to its conditions.

perfect competition in Russia examples

To find such examples, need to find those markets, which mainly operate a small business. If the market where it operates, it is possible to enter any company, and also easy to get, then this is a sign that competition.

Examples of perfect and imperfect competition

If we talk about imperfect competition, the bright her representative are monopoly markets. Businesses that operate in similar conditions, have no incentive to develop and improve.

In addition, they produce such goods and provide such services that cannot be replaced by any other products. This explains the poorly controlled the level of prices, both non-market means. An example of such a market can be called a sector of the economy – oil and gas industry, a monopoly is JSC «Gazprom».

An Example of perfect competition market is the provision of services on repair of cars. Different and one HUNDRED garages in the city and in other localities there are many. The type and amount of work performed is almost the same everywhere.

examples of perfect competition firms

It is Impossible in the legal field artificially raise the price of the goods, if the market is perfect competition. Examples to support this claim, every seen in my life many times on a normal market. If a seller of vegetables raised the price of tomatoes for 10 rubles, despite the fact that their quality is the sameas competitors, buyers will cease to buy it.

If monopoly the monopolist can influence the price by increasing or reducing supply, in this case such methods are not suitable.

Under perfect competition it is impossible to raise the price, as it may make the enterprise-monopolist

Due to the large number of competitors just to raise the price, as all clients will simply pass on the purchase of the relevant products from other companies. So, the company could lose its market share, which would entail irreversible consequences.

In addition, in such markets there is a decrease in the price of goods certain merchants. This happens in an attempt “to win” the new market share to increase revenues.

examples of perfect and imperfect competition

In order to reduce prices, you need to spend less of raw materials and other resources to produce one unit of output. Such changes are possible only through the introduction of new technologies, optimizing production and other processes that can lower the cost of doing business.

Russia's markets that are close to perfect competition, developing quickly enough

Speaking about the domestic market, perfect competition in Russia, examples of which are found in almost all areas of small business, developing a medium pace, but could be better. The main problem is the weak support of the state, as very many of the laws focused on supporting the largest producers, who are often monopolists. And yet the small business is left without special attention and the necessary funding.

example of perfect competition market is

Perfect competition, examples of which is shown above, is the ideal form of competition by understanding the criteria of pricing, supply and demand. To date, no one economy in the world can't find such a market, which would meet all the requirements that must be observed under perfect competition.


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Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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