Perfect competition. Examples of perfect competition

Improving production, reducing production costs, automating all processes, optimizing the structure of enterprises - all this is an important condition for the development of modern business. What is the best way to make enterprises do all of this? Only the market.

The market is understood as the competition that occurs between enterprises that produce or sell similar goods. If there is a high level of healthy competition, then for the existence of such a market it is necessary to constantly improve the quality of the goods and reduce the level of common costs.

The concept of perfect competition

The perfect competition, the examples of which are given in the article, is the complete opposite of the monopoly. That is, it is a market in which there is an unlimited number of sellers who are engaged in the same or similar goods and at the same time can not influence its price.

At the same time, the state should not influence the market or engage in its full regulation, since this can affect the number of sellers, as well as the volume of products on the market, which is immediately reflected in the price per unit of goods.

Despite, it would seem, ideal conditions for doing business, many experts are inclined to believe that in real conditions, perfect competition will not last long on the market. Examples, which confirm their words, have happened many times in history. In the end result, the market became either an oligopoly, or some other form of imperfect competition.

Perfect competition can lead to a decline

This is due to the fact that in the long run there is a constant decrease in the price. And if the human resource in the world is big, then the technological one is very limited. And sooner or later the enterprises will move to the fact that all fixed assets and all production processes will be modernized, and the price will still fall because of attempts of competitors to win a larger market.

And this will lead to the functioning on the verge of a break-even point or under it. Save the situation can already be only influence outside the market.

The main features of perfect competition

We can distinguish the following features that a market of perfect competition should have:

- a large number of sellers or manufacturers of products. That is, all the demand that is on the market should be covered not by one or several enterprises, as in the case of monopoly and oligopoly;

- the products in such a market should be either homogeneous or interchangeable. It is understood that sellers or manufacturers produce such goods, which can be completely replaced by the products of other market participants;

- Prices are set only by market and depend on supply and demand. Pricing should not be affected either by the state, or by specific sellers or producers. The price of the goods should be determined by the cost of production, the level of demand, as well as supply;

- there should be no barriers to exit or enter the market of perfect competition. Examples can be very different from the sphere of small business, where special requirements are not created and special licenses are not needed: atelier, shoe repair services, etc .;

- there should be no other effects on the market from the outside.

Perfect competition is extremely rare

In the real world, we can not give examples of firms of perfect competition, since there is simply no market that operates under such rules. There are segments that are as close as possible to its conditions.

To find such examples, it is necessary to find those markets on which the small business mainly functions. If the market where it functions, you can enter any company, and it is also easy to get out of it, then this is a sign of such competition.

Examples of perfect and imperfect competition

If we talk about imperfect competition, then its bright representative is the monopoly markets. Enterprises that function in such conditions have no incentive to develop and improve.

In addition, they produce such goods and provide such services that can not be replaced by any other products. This explains the poorly controlled price level, which is established by a non-market way. An example of such a market can be called a whole sector of the economy - the oil and gas industry, and the monopoly company is Gazprom.

An example of a market for perfect competition is the scope of providing car repair services. There are many different SRTs and car repair shops both in the city and in other settlements. The type and number of works performed are practically the same everywhere.

It is impossible to artificially raise the prices of goods in the legal field, if there is perfect competition on the market. Examples that confirm this statement, everyone has seen in their lives repeatedly in the ordinary market. If one vegetable seller raised the price of tomatoes by 10 rubles, while the quality of them is the same as that of competitors, then buyers will stop buying from him.

If monopoly can influence the price by monopoly, by increasing or decreasing supply, then in this case such methods are not suitable.

With perfect competition, you can not raise the price yourself, as a monopoly enterprise can do

Because of the large number of competitors, it is simply impossible to raise the price, since all customers will simply switch to purchasing the corresponding goods from other enterprises. Thus, an enterprise may lose its market share, which will entail irreversible consequences.

In addition, in such markets, there is a decline in commodity prices by individual sellers. This happens in an attempt to "recapture" new market shares to increase income levels.

And in order to reduce prices, it is necessary to spend less raw materials and other resources on the production of one unit of production. Such changes are possible only through the introduction of new technologies, optimization of production and other processes that can reduce the level of costs for doing business.

In Russia, markets that are close to perfect competition are not developing fast enough

Speaking about the domestic market, perfect competition in Russia, examples of which are found in almost all spheres of small business, develops at an average pace, but could have been better. The main problem is the weak support of the state, since so far many laws are aimed at supporting large producers, which are often monopolists. Meanwhile, the sphere of small business remains without special attention and necessary funding.

The perfect competition, the examples of which are given above, is an ideal form of competition from the understanding of the pricing, supply and demand criteria. For today in any economy of the world it is impossible to find such market which would correspond to all requirements that it is necessary to observe at a perfect competition.