Name: Perfect competition | Forms of competition | Microeconomics | Khan Academy
Uploaded: 2018-04-09T05:52:22.000Z
Duration: 10 min 17 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

In pretty much all of
the videos so far we've

been assuming an economic
ideal, and that economic ideal

is think about it in a
little bit more exact terms,

in terms of what are
the ground rules we need

to have to really have this
ideal perfect competition.

It's important to realize that
there's very few markets that

And those that are are
very good for consumers,

but there are that get
very close to being

And if we have time, we will
discuss those in this video.

So one of the first
stipulations is many players.

And they need to be competing
for the kind of the same buyer

And so they need to
have identical products.

Remember, we're talking
about an economic ideal here.

There's very few markets where
the product is absolutely

identical or the service
is absolutely identical,

but we're talking about an
economic ideal over here.

The next condition you need
is no barriers to entry.

attractive for other people
to go into that market,

and there's nothing that's
really going to stop them.

If the firms that are
already in the market

are making an economic profit
that means that it's good.

You can do better in this market
than your opportunity costs,

and so people will
enter into that market.

And in order for this market
to be perfectly competitive,

we can't have any barriers,
nothing stopping those people.

On top of that, there
can be no advantage

and, assuming that they
are somewhat competent,

they are going to be able to
compete on kind of equal terms

And then the last one,
and this is important,

is that you have to have
really good price information.

The buyers need to know all the
prices so that they can really

do good comparison
shopping, and the sellers

need to know everyone's
prices so that they can really

There are very few that
are completely purely

But one of them that does
come to mind, one of them that

does definitely come to mind
is the US airline industry.

There are definitely
many different airlines.

They would say that
they're differentiating

on their service and what type
of food they give or, I guess,

charging for the baggage
check-in and all the rest.

But for most consumers,
they're just like, look,

from San Francisco to New
York, and they view them

Well, there are some barriers to
entry in the airline industry.

need to either find
or borrow or whatever,

But, either way, you
need a lot of capital

But for the most part, at
least in the United States,

But if you are a US operator
and you have the capital

you will be able to be the next
Virgin America or Southwest

So there are some barriers
to entry, but they are low.

that no one else can
start a new airlines.

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Perfect competition | Forms of competition | Microeconomics | Khan Academy

assume

absolutely

scenario

realize