Talk:Perfect competition
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I was hoping to find information on behavior of the firm in a perfectly competitive market, particularly w.r.t. costs and revenues. This is a topic I have had great difficulty integrating into my consciousness using standard textbooks on economics. I'm sure a Wikipedia article covering the same subject matter, if one were to exist, would be much more enlightening!
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I have removed:
Other examples include the stock market and foreign currency exchange.
Large pension funds, mutual funds and banks are not small actors without market power.
However I agree that these markets are closer to perfect competition than most. mydogategodshat 17:55, 18 Jan 2004 (UTC)
Hi Bluemoose, do you mean by "set by firms" that the firm's marginal cost will be the price? If so, I still think there is a better way to say it, becuase the monopolist "sets the price", not the small seller in a competitive market. Mgw 18:58, 22 Apr 2005 (UTC) ---
This article really needs a diagram to show perfect competition. I'll try and find one, but I'm not really sure what's copyright and whats not. It's possible to draw one, but you'd probably need a reasonably sophisticated program that wouldn't get scared when you tried to draw curves. Thanks Inebriatedonkey 28 June 2005 08:00 (UTC)
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[edit] Examples
In Re Examples The first paragraph needs to go. Elasticity has nothing to do with perfect competition.
Plus, agriculture is closer to inelastic than elastic. Still learning the rules, will edit in a few days if I don't see objection.--Samadhi69 07:47, 5 February 2006 (UTC)
- I took out the reference to elasticity. It actually does have to do with perfect competition (the fact that firms act as if they face perfectly elastic demand, or consumers face perfectly elastic supply, is sort of equivalent to the assumption of price taking) but not in the way that was implied by the sentence. As a side note, perhaps this article should note Vernon Smith's experiments which suggest that in practice one does not need a large number of perfectly informed agents for the result to look like a perfectly competitive equilibrium? radek 06:00, 6 March 2006 (UTC)
[edit] Request
Hello; does anyone know of a good text book on the subject of perfect competition? PJ 18:24, 11 February 2006 (UTC)
[edit] Sufficient but not necassary conditions
If by perfect competition one means 'price taking behavior' or 'p=mc' then the listed conditions are not necassary, just sufficient. A Bertrand market with two firms (so no atomicity or free entry) gets you those. Different technologies (costs) or information will give you limit pricing. It would be useful to have a more precise definition of what is meant by 'perfect competition' - Ostroy has a bunch of work on this, among many others.radek 02:29, 12 July 2006 (UTC)
[edit] these "five" conditions have nothing to do with perfect competition
Definition is inconsistentas first condition stipulates that firms are "price taker" and third condition that "All firms and consumers know the prices set by all firms" - so that firms "set prices". Only one question : if everybody is price taker, WHO set prices ? Mister Market ? That's nonsense. The main condition is that there is an "auctioneer" in the Walras mood, who set prices - agents believing' they can buy and sell all they want at this prices. Nothing to do with the "five conditions".
Answering your question about who set the price, I think it is the interaction of demand and supply who is responsible for this issue. Sheitan 14:56, 13 January 2007 (UTC)
Market forces set the market price, because all products are homogenous, market price is set for all firms where D=S, don't forget this is all hypothetical, as is the entire model, for example, we have to assume perfect knowledge of the market, which is never going to happen.Lukeitfc 19:36, 25 February 2007 (UTC)
