Perfect competition and offers
Introduction
We know that the market is where offers, demands and therefore sales where exchanges of goods and services take place. This is formed by current potential buyers, since they share needs or desires that can be met through exchange relationships. Then the market varies from the competence of interests either from goods and services to meet one or several consumer needs and that the different economic agents are related to this.
Although many also defines it as one of the various systems, institutions, procedures, social relations and infrastructure in which economic agents participate in the exchange of goods and services, therefore, the prices of those products are established in the marketservices and is the main economic component studied by economists which analyzes market failures, international markets, economic environment, etc. To offer goods and services within a market it is necessary to know what are the needs that society face and how many need those services to satisfy it.
Developing
And it is that both supply and demand have to have a balance point, since Montero tells us that. But we will ask ourselves why the competition is linked so much, because this same concept refers to a large presence of companies or present that execute what is the offer and sale of a benefit in the market where they expect it to be suedaccording to the need or preference that this desires to meet that need and that is also that the competition can be presented due to a difference in intensity and other levels that allow them to be classified differently.
That classification will depend on the amount of control in its prices established by those who sell the product that would be the offeror or the consumer, although there are also other factors such as its variety of good that could be found in the market and the ability in whichThe new sellers will enter the market.
And if there were no competitive markets there would be no improvement innovations in their assets that they can offer to their customers, it is like saying that everything was systematic without techniques to be governed to meet the needs and expectations in users who acquire that. Where the market is nothing more than the exchange of goods or services in exchange for a benefit of both which are divided into two that would be a perfect competition market where the price does not influence but the perfect competition market does.
Perfect competition market
We talk about an abstract state where there are many buyers and vendors, however, this means that they sell identical products or services and that is that each of the agents is to say the buyers, vendors, producers, consumers, all of them have perfect information whatIt means that each market participant both the plaintiff or bidders know what is happening in the market, that is, which goods or services are also being offered at what price is being offered and who sells to whom.
So this already begins to be more abstract, since to have real real information, everyone has to go on the market always know everything that is happening. One thing to emphasize is that it does not exist, although something that can be assimilated with a close lake is that there are no barriers to entry or exit An example would be the agriculture market that has barriers to entry and exit. Its main characteristics are four:
- Product homogeneity
This is a characteristic where there is no differences between the product that sells the offeror and the product that others sell, that is, the products that are sold are identical so it would be possible to be perfect substitute goods so that no company can chargea value greater than that of another without losing business.
- Price-acceptors
This does not influence the price and it is because if there are too many bidders and demanders, which causes none to have enough power in the market to alter prices such as each company sells a sufficiently small proportion of the total market production its decisions does notIt influences the market price, therefore, they are considered to be acceptors. This is applied as consumers and companies.
- Market transparency
Where all market participants both buyers and sellers have full knowledge of the general conditions in which the market is operated by having sufficient information about the price, quality and characteristics of the product.
- Freedom of entry and exit of the market
There are no barriers that prevent companies.
conclusion
In summary, if we get the market to produce product homogeneity, acceptance prices, market transparency and that there is a freedom of entry and exit, we would be talking about a perfect competition market. An example that we could talk would be a fruit market, in them the law of supply and demand is governed, there is homogeneity of the product, there is a certain transparency in the market and although it is not always fulfilled because there will be such a freedom of entry and exit.
Leave feedback