The Preference of the World We Live In As the World of Perfect Competition
The human population today would prefer the world we live in to be a world of perfect competition because there is complete knowledge, and there is no information failure; hence knowledge is shared evenly between all participants. There will be no barriers to entry, so existing firms cannot derive any monopoly power. According to ‘Perfect Competition,’ only reasonable profits will be made, so producers cover their opportunity cost. There will be no need to spend money on advertising because there is perfect knowledge, and firms can sell all they can produce. Also, selling unbranded goods makes it hard to construct an effective campaign. There will also be maximum allocative and productive efficiency. Equilibrium will occur where P=MC, hence allocative efficiency.
References
Perfect competition. (2020). Retrieved 19 April 2020, from https://www.economics.co.uk/Business_economics/Perfect_competition.ht