In: Economics
As a producer, which market structure is more favorable? Please explain your answer.
Pure or optimal competition is a theoretical structure of the
market, where the following conditions are met:
Both businesses market the same product (the product is a
'commodity' or 'homogeneous' product).
All the firms are price takers (they can't control their product's
market price).
Business shares are invaluable.
Buyers have maximum or "good" knowledge about the commodity being
marketed and the prices paid by each company in the past, present
and future.
Tools are ideally flexible for such work.
Companies can enter or exit the market at no charge
Perfect competition is an ideal type of market structure where
both producers and consumers have complete and symmetrical
information, no transaction costs, and where a large number of
producers and consumers compete with each other.
Theoretically, total competition is the opposite of a monopolistic
market.
Since all actual markets exist beyond the plane of the ideal model
of competition, each may be categorized as imperfect.