Economics Dictionary of ArgumentsHome
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| Perfect competition: Perfect competition is a market structure where numerous small firms sell identical products, no single firm can influence prices, and there is free market entry and exit. Buyers and sellers have perfect information, and resources are fully mobile. In the long run, firms earn normal profits as prices equal marginal costs. See also Competition, Pure competion, Markets._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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James M. Buchanan on Perfect Competition - Dictionary of Arguments
Boudreaux I 46 Perfect competition/Buchanan/Boudreaux/Holcombe: Under perfect competition, industry output of goods or services is said to be at the maximum level that economic conditions permit. That is, output isn’t too low. But output is too low when an industry isn’t perfectly competitive. And when output is too low, society is harmed. >Competition, >Entrepreneurship. Government action: Buchanan showed that government action meant to reduce pollution from such industries, by causing those industries’ outputs of goods or services to fall even further, might inflict even more harm on society. >Government policy/Buchanan, Decision-making process/Buchanan. Externalities/Problem: That is, it’s possible that the benefit society gets from the reduced pollution is more than offset by the harm it suffers from the reduced output of goods or services. >Externalities. This conclusion applies more generally. The complexities of real-world markets mean that in the absence of actual market prices for external effects, there is no good way to find the optimal allocation of resources. Costs are subjective, as the previous chapter explains, so without an accurate measure of external costs, any policy prescription will be based on guesswork. Externalities might result in inefficiencies, but there is no guarantee that matters would be improved by a government-directed remedy. (…) this fact did not lead Buchanan to advocate against all government responses to pollution and other externalities, but it did prompt him to advise politicians and the public to temper their enthusiasm about governments’ abilities to improve matters with interventions._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconBuchan I James M. Buchanan Politics as Public Choice Carmel, IN 2000 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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