¶ … Prevent Competitive Markets in the United States
The United States follows a system of "free market economy" in which most businesses are privately owned and where individual producers and consumers determine the kinds of goods and services produced as well as the prices of such products. Competition is a key factor in market economies as it keeps the prices of products in check, forces the competitors to enhance the efficiency of their production process, and drives the inefficient producers out of the market. However, "perfectly competitive market" is largely a theoretical economic concept which does not exist in any country and most countries, including the U.S., follow a system of mixed economy. In such 'mixed economies,' there are several factors which prevent the existence of a perfectly competitive market and the U.S. is no exception to this rule. In this paper, we shall discuss some of the factors that work against competition in the U.S., besides examining the factors inherent in a perfectly competitive market.
Factors that Support Perfectly Competitive Markets
Although rarely possible in practice, the concept of perfect competition is used by economists as an "ideal" benchmark for evaluating the performance of real-life markets. It is generally agreed that the factors necessary for the existence of such a market are:
large number of relatively small buyers and sellers, each acting independently.
The product is homogeneous, i.e., the firms in the market offer a uniform good or service for sale.
There is freedom of entry into and exit from the market and there are no barriers.
Market participants have full knowledge of the economic and technical data relevant to their decision making, i.e., all buyers and sellers at all times know the prices of all other buyers and sellers.
The large number of small buyers and sellers ensure that the power to influence the behavior of the market is sufficiently dispersed...
Healthcare Administration In a perfectly competitive market, the following will occur in response to different changes in the market. A decrease in the wage of clinic-based nurses will cause a reduction in the cost for nurses. This will result in a decline in the price of physician services, because the price decrease is going to be passed onto the consumer. The output of physician services will not change as the cost declines,
The manufacturers are merely consulted; their influence is very limited. In the end, once the price is set, they can only decide if they are willing to sell at that price or not. Take it or leave it. * the combinations of the factors above will put pressure on the pharmaceutical companies to expand geographically as quickly as possible, in order to maximize their chances of recovering their R&D costs
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Instead, IBM began to falter after a series of product failures. As a result, many companies gained market share against IBM with some even over taking it; an efficient market took care of the issue. Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or
In developing countries, consumers are more affected for two reasons. One is that consumers are more likely to buy raw ingredients. Without manufacturing entities to absorb some of the commodity price increases, consumers are left to absorb almost all of the increase (Ibid.). As a result, food prices have increased more in the developing world than in the developed world. Additionally, consumers in these countries already expend a significantly higher
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