PERFECT COMPETITION
- There are many buyers and sellers
- Firms sell identical (homogenous) products
- Firms have no market power
- Firms in perfect competition are price takers
- There are no barriers to entry into the industry
- Established firms have advantages over new ones
- Sellers and buyers are well informed about prices
Case Study - Horse Betting
When placing bets, consumers can just look down to see who is offering the best odds. Thus, no one bookie can offer worst odds than those being offered by the market as a whole, since consumers will just go to another bookie. This make the bookies price-takers.
Furthermore, the product on is very homogenous, with the only differences between individual bets being the pay-off and the horse. Of course, there are not an infinite amount of bookies, and some barriers to entry exist, such as a license and the capital required to set up.
Furthermore, the product on is very homogenous, with the only differences between individual bets being the pay-off and the horse. Of course, there are not an infinite amount of bookies, and some barriers to entry exist, such as a license and the capital required to set up.
Countries That Practices Horse Betting
The United States of America
Australia
France
Germany
Russia
RESOURCES
- http://www.economicsonline.co.uk/Business_economics/Perfect_competition.html
- http://www.investopedia.com/terms/p/perfectcompetition.asp
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