Question

are free, perfectly competitive markets compatible with social goals like equality and equity? Discuss with reference to the education and healthcare markets.

Answer 1

Free and competitive market has higher output and lower price, in comparison to other type of market competition. Further, firms are price takers. So, this is the market that helps people and promote efficiency. But, its role is limited to help achieve the goal of equality and equity as products are homogeneous in nature and people demand differentiation. With reference to education, the basic education can be of the same level, delivered to people at a price set by people at par as perfect competition, but with specialization in education or higher education, there is a need of differentiation and perfect competition does not work in these segments of the education. On a similar note, preventive health care can be homogeneous and people can avail it as a part of promotion of equality and equity, but specialized treatment plan varies with each customer and patient. So, perfect competition does not work with specialized treatment plans and it attracts cost.

Hence, perfect competition has limited scope to promote social goals as mentioned.