Perfect competition Essay Example for Free

Perfect competition searchIn our life, electricity is very importance and this is unity of necessary things we use in everyday. In Vietnam, in that location is big corporation supply electricity for alone country which is EVN and the commercialise place of electricity in Vietnam is the monopoly. stolon of all, while perfect competitive market has m each buyer and loter, monopoly is the market which has plainly one degenerate supplying the whole market. As the results, monopoly creates the unique product which dose not has close substitutes. Of course, in monopoly, in that location are no firms offering essentially identical same as perfect competitive market so has no close competition and, therefore, has the power to influence the market equipment casualty of its product. Moreover, there are strong barriers to entry in this market. A monopoly remains the only seller in its market because otherwise firm cannot enter the market and compete with it. Why monopoly can a rise? We should consider three sources of barriers. First, the simplest stylus for a monopoly to arise is for a single firm to own the key resource. EVN, for example, it own the key gossip to produce electricity such as coal and water.Second, in many cases, monopoly arises because the Government has given one person or firm the exclusive right to sell some good or service. The transparent and copyright laws are two importance examples. When you use your computer, it probably uses some version of Windows, the operating dodging sold by the Microsoft Corporation. Microsoft applied and received a copy right from the Government. Surely, nobody can sell and copy this except Microsoft and if one person wants to buy a copy of Windows, they have to pay higher(prenominal) price for this product. And the last is production process.When the firm has the copyright, it can raise the out put of the product and as the result price pass on be decrease. By the law of supply and demand, the costu mers lead be attracted outside from the other firms. Of course, other firms will loss profit and be kicked out of the market. The firm has the copyright will be come monopoly. In addition, while perfect competitive firms have to take the given price and run price taker, monopolist firm has the market power to set the price of its product and become price maker. For instance, consider the market for electricity. If in Vietnam there are many of firmsupply electricity, the prices of it will be lower but in fact, there is only one EVN supply electricity for whole country so even if it charge the high price people have to accept because it is impractical to get electricity from anywhere else. Not surprising, the monopolist has much greater market power than any single firm in a competitive market. In the case of a necessity wish electricity, the monopolist could command quite a high price. Overall, all of characteristics such as there is only one producer, unique product, strong barr iers to entry, price maker together they create one kind of market which is perfect competitive market.