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Discuss Your Opinion of Three Characteristics of Perfect Competition

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Perfect competition pertains to the optimal situation that any market could become. The

ideal marketplace includes features like all sellers offering the same item at the same price. There

is no dominant firm, product quality is uniform across the industry, and entry and exit are

unrestricted in a perfectly competitive market.

There is no specific corporation that owns a considerable market share. Economic

analysis connects the shortage of perfect competition to market economies' natural motions and

phases (Andrés-Cerezo & Fabra, 2020). The effects of numerous market conditions demonstrate

this. For example, ten entrepreneurs have formed a brand-new market. Once these ten equivalent

businessmen begin to behave inside this framework, the market will begin to function. Being

discovered in a common market, they all start up generic storefronts to market similar products.

Currently, a perfectly competitive market is still the foundation of the market.

Manufacturing results in a standardized good. Perfect competition can only arise when

customers view the commodities of all manufacturers to be identical. However, it can only exist

when the industry output is a product, sometimes referred to as a standard product. Due to the

uniformity of standardized items, a company that makes only one cannot raise prices without

seeing a significant drop in business (Jarosch et al., 2019). It implies that price-taking enterprises

encounter perfect price elasticity of demand.

There is freedom for entry and exit for new markets. Companies can enter and leave the

market in a perfectly competitive market with little difficulty. Market entry refers to when new

businesses enter an existing market. Because of the lack of restrictive government regulation and

the low entry cost, new businesses can enter the market. A market exit occurs when companies

stop participating in a particular market. Companies can leave the market with relative ease if

there aren't any unforeseen expenses associated with winding down operations.
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Due to this fact, one may wonder if it is in an economy's best interest to have perfectly

competitive marketplaces. Consideration must be given to the fact that imperfect markets offer

answers to the problem of economic efficiency. This factor hints at a compromise between the

benefits and drawbacks of a completely highly competitive environment and a defective product.
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Reference

Andrés-Cerezo, D., & Fabra, N. (2020). Storing power: Market structure matters.

https://www.jstor.org/stable/pdf/resrep30348.pdf

Jarosch, G., Nimczik, J. S., & Sorkin, I. (2019). Granular search, market structure, and

wages (No. w26239). National Bureau of Economic Research.

https://www.nber.org/system/files/working_papers/w26239/w26239.pdf