Perfect competition – discussion

Perfect competition – discussion

Perfect Competition
Firms like Walmart, Target, and Kmart are often given as examples of competitors. Ironically, these firms are not what an economist would define as perfectly competitive firms.

Why are these firms not perfectly competitive?
What are the conditions that create perfect competition?
Name or describe an example of a perfectly competitive good or firm.

Solution Preview

Perfect competition

It describes a situation in the market where the competition among firms is at its highest possible level (Cahuc, Carcillo & Zylberberg, 2014). However, businesses like Walmart, Kmart and Target are not perfectly competitive because they do not deal with homogenous products. Also, customers in these firms do not usually have complete information about the market.

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