Business Ethics

There is an assumption that when competition is perfect, it will never have an impact to the market share. This situation is regardless of whether the buyer or seller is involved. Furthermore, in this condition, the economy will be stable and companies will only make normal returns. All workers will earn sufficient wages while the supply and demand activities will be satisfactory. Clearly, this situation will subject all companies to a balanced technology and resources.

However, majority of economists fail to agree with the concept of perfect competition. They perceive this statement to be impossible especially in the current society. Economists further argue that the supply of products and services can never be balanced with the demand. This is due to natural disasters that incorporate adverse weather conditions. As a result, it interferes with the supply and demand.  This implies that the condition cannot be controlled.

Another argument in attribute to perfect competition is that it can never be possible when there is delay in distribution of products. For instance, when products are transported from one region to the next and it rains heavily, they will not reach the destination on time. This implies that the expenses that are involved in distribution will rise. As a result, this will contribute to high prices of the products at the market. The perfect competition approach also assumes that products are homogenous and that price is the only aspect to compete for.

This theory tends to ignore the truth that various firms manufacture their products in relation to quality. A good example is evident in car models that are either meant for transport or luxury. Based on this theory, all companies cannot access resources or technology.  Only those that conduct efficient research can upgrade their system of technology. In general, it is not possible for firms to use same methods in the market. This explains why there is no perfect competition in society.

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